Will the smallest Hungarian coin be phased out and replaced by a new banknote?

Inflation remains sky-high in Hungary. This justifiably raises the question of whether the smallest five-forint coin will be phased out in favour of a larger denomination, the 30,000-forint note.

Inflation also affects cash use

According to the statistics of the Magyar Nemzeti Bank (MNB), high inflation has a direct impact on cash usage. There is less demand for larger denominations, and smaller denominations are used more often and therefore wear out faster.

In July, there were nearly 650 million banknotes in circulation. Compared to the previous year, there was a 4.1% decrease in value and a 2.6% drop in volume. The two largest denominations, the 10 and 20,000 forint banknotes, were less used.

Change in banknotes and coins?

The smallest value 5 forint coin accounts for 33% of all coins. “The inclusion of the 5 forint is not on the agenda,” the MNB told Index. They added that the coin is actively used and there is no reason to include it.

The MNB plays a key role in the design of the structure of forint notes and coins. Before a decision is taken, a lengthy impact assessment is typically carried out, as this involves huge costs.

“The introduction of new banknote or coin denominations is not on the agenda,” the central bank asserted. So, despite high inflation and a deteriorating forint, there will be no 30,000 forint banknotes for the time being.

The role of cash is diminishing

In recent years, the number of cashless, electronic payments has been growing steadily. However, Hungarians still often pay cash for smaller purchases.

MNB said that there was no upcoming target date for the introduction of the euro. “After Hungary joins the ERM II exchange rate regime, it will be necessary to examine the role that Magyar Pénzverő Ltd and Pénzjegynyomda Ltd can play in the production of euro payments.”