Despite years of soaring inflation and the rapid spread of digital payments, Hungarians continue to keep surprisingly large amounts of cash at home. According to a new study by experts at the Hungarian National Bank (MNB), the main reason is not everyday shopping but the desire for financial security during uncertain times.
The study, The Role of Cash in Household Savings, published in the June 2026 edition of the Hitelintézeti Szemle (Credit Institution Review), concludes that many households deliberately sacrifice potential investment returns in exchange for having immediate access to emergency funds.
Inflation did little to reduce cash holdings
From 2022 to 2025, Hungary experienced one of the highest inflationary periods in recent history, with annual inflation peaking at 25.7% in early 2023. Economically, this should have encouraged households to move their savings into interest-bearing assets such as government bonds.
Instead, the amount of cash held by the public declined only slightly. As inflation eased, both cash holdings and bank deposits began to rise again. According to the MNB researchers, this behaviour reflects a different way of thinking about savings rather than financial irrationality.
Emergency reserves come first
According to Portfolio, the study describes household savings as a hierarchy. At the base are emergency reserves designed to cover unexpected expenses. Above them are savings set aside for specific goals, such as buying a home, retirement or healthcare costs. Long-term investments occupy the top level.
Cash plays its biggest role in the first category. For many households, the priority is immediate access rather than earning interest. Researchers estimate that for households living on the median wage, this emergency reserve often amounts to around HUF 1 million (approximately EUR 2,500), with many people choosing to keep it in physical banknotes.
Security outweighs investment returns
The study found that cash provides psychological reassurance. Even though respondents understood that inflation reduces the purchasing power of money kept at home, many considered this a worthwhile price for the feeling of security.
According to MNB surveys:
- 66.7% keep cash at home for everyday expenses.
- 61.6% maintain it as an emergency reserve.
- Only 35% view it primarily as long-term savings.
- In another survey, 82% said they keep banknotes at home to prepare for unexpected situations, regardless of income or education.
War and uncertainty boosted demand for cash
The research also highlights how external crises influence cash demand. Following Russia’s invasion of Ukraine in spring 2022, Hungarians withdrew almost HUF 500 billion in cash within just three weeks as uncertainty surged. Although some of that increase later reversed, researchers say the episode demonstrated how quickly households turn to physical cash during periods of instability.
Distrust of financial institutions also plays a role
The report identifies several long-term reasons why Hungarians continue to prefer banknotes:
- concerns about economic uncertainty and possible job losses;
- distrust of banks and financial institutions;
- worries about access to money during crises;
- perceived high banking costs;
- and, in some areas, limited access to bank branches or post offices.
Nearly half of respondents cited some form of distrust in financial institutions as a reason for keeping cash at home.
Cash remains part of a broader savings strategy
The researchers stress that cash is not replacing investment altogether. When people save for longer-term goals, they are more likely to move money into government bonds or other investment products.
However, emergency cash is treated as a separate category that many households are reluctant to touch, even during periods of high inflation. Some households also keep part of their emergency reserves in foreign currencies, particularly euros or US dollars, as protection against possible weakening of the Hungarian forint.
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Building trust may matter more than financial education
The study concludes that simply encouraging people to improve their financial literacy will not significantly reduce the amount of banknotes held at home. According to the MNB researchers, increasing trust in financial institutions, improving economic predictability and making financial services more transparent and affordable would be more effective in encouraging households to invest their spare cash instead of storing it at home.
