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March 2020 issue of the Financial and Economic Review is now published

The papers published in the March 2020 issue of Financial and Economic Review, the Magyar Nemzeti Bank’s academic journal, deal with the challenges related to the measurement of inflation in the 21st century, the consequences of the lack of coordination between the branches of economic policy across the euro area, the regional patterns of card payments in Hungary and the analysis of the changes in Hungarian cash demand. The work of the 2019 Nobel Prize Laureates in Economic Sciences and the obstacles preventing bitcoin from becoming a widely accepted means of payment are also discussed in essay’s of the issue. 

In their study, György Matolcsy, Márton Nagy, Dániel Palotai and Barnabás Virág examine that the 21st century megatrends such as digitalisation, the transformation of globalisation, ageing societies or even climate change are posing new, hitherto unknown challenges not only to the operations of the economies but also to the measurement of inflation. Their starting point is that several major central banks have announced a thorough review of their inflation targeting systems in recent months. As a first step, the authors identify new types of bias in the measurement of inflation, and call attention to new patterns determining the changes in consumer prices, and the opportunities offered by technological progress. They discuss that benefiting from the advantages of the 21st century megatrends, economic theory can help economic policymakers again, providing them with more solid support than over the past decade.

In their paper, Kristóf Lehmann, Olivér Nagy, Zoltán Szalai and Balázs H. Váradi state that the economy of the euro area has departed significantly from the logic of the Maastricht criteria in the last three decades. The lack of an appropriate coordination between monetary and fiscal policy and overlooking the sectoral interrelationships also point to the existence of a systemic problem. They establish that under the current political and legal framework, the European Central Bank may be left with limited leeway for easing monetary conditions. As a result, the focus shifted on a more active fiscal policy to stimulate the euro area economy, which, however, may sharpen the debate between the policymakers of individual Member States.

László Kajdi and István Nemecskó examine the regional patterns of card payments in Hungary. They discuss that the card acceptance network primarily needs to be developed in the eastern areas that are far away from cities. A strong degree of concentration around cities and major tourist destinations in the card acceptor network can be traced in card turnover, and card use is the most frequent in the capital and North-Western Hungary. The share of card ownership in the population is the highest in Central Hungary and the lowest in the Northern Great Plain.

Tamás Végső analyses the recent strong growth of cash in circulation in Hungary in the context of international research. He discusses that there is a similar process in the majority of the developed economies despite electronic payments gaining more popularity, mainly due to cash demand for savings purposes. In addition to the demonstration of the situation in a few foreign states, he attempts to identify the special factors characterising Hungary, and also considers how the role of cash might change in Hungary.

In her essay, Klára Major praises the 2019 Nobel Prize Laureates in Economic Sciences, presenting the significance of their life work. In their paper, Gyöngyi Bugár and Márta Somogyvári seek to discover why bitcoin has not spread as a generally accepted medium of payment and how it has become a high-risk form of investment instead.

In addition to these, the March issue contains four book reviews and two conference reports as well.

We wish you a very pleasant reading.

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