Cash stock almost tripled in past decade

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In nine years, the stock of cash in circulation in Hungary almost tripled, writes leading business daily Világgazdaság.

While the total value of banknotes and coins was HUF 2.652 trillion in March 2012, it was HUF 7.265 tln at the end of March 2021, data from the National Bank of Hungary (MNB) shows.

According to the central bank, growth was strong due to the demand shock from the first wave of the coronavirus epidemic in March 2020. At the time, over HUF 250 million in cash was withdrawn in just eight days.

The MNB said the main driver of the increase in cash holdings observed in Hungary since 2010 has been the increase in the demand for cash for savings.

This was largely because the central bank base rate, and thus bank deposit rates, fell from 6-7% in 2011 to only 0.65% by 2020, thus greatly reducing the opportunity cost of holding cash, the paper added.

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