The Monetary Transmission Effects of Central Bank Digital Currency (CBDC) in Hungary: A Simplified DSGE Simulation

Gyüre, Ferenc (2026) The Monetary Transmission Effects of Central Bank Digital Currency (CBDC) in Hungary: A Simplified DSGE Simulation. Public Finance Quarterly = Pénzügyi Szemle, 72 (2). pp. 97-111. DOI https://doi.org/10.35551/PFQ_2026_2_4

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Official URL: https://doi.org/10.35551/PFQ_2026_2_4

Abstract

The paper examines how the introduction of a moderate, interest-neutral (policy-rate-remunerated) central bank digital currency (CBDC) modifies the short-run transmission of monetary policy in Hungary’s 2025 macroeconomic environment. It extends a baseline New Keynesian DSGE model with a CBDC, in which household savings are split between deposits and CBDC while bank lending is tied to deposits, so deposit substitution can weaken intermediation. Following calibration, simulations and impulse responses suggest that rule-based stabilisation largely remains intact, but the responses of real variables are more muted and adjustment may be slower.

Item Type:

Article

Uncontrolled Keywords:

central bank digital currency, monetary transmission, dynamic stochastic general equilibrium model, bank intermediation, financial stability

JEL classification:

E42 - Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
E44 - Financial Markets and the Macroeconomy
E52 - Monetary Policy
E58 - Central Banks and Their Policies
G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages

Subjects:

Finance

DOI:

https://doi.org/10.35551/PFQ_2026_2_4

ID Code:

13161

Deposited By:

Alexa Horváth

Deposited On:

28 Jul 2026 12:04

Last Modified:

28 Jul 2026 12:04