The Monetary Transmission Effects of Central Bank Digital Currency (CBDC) in Hungary: A Simplified DSGE Simulation
DOI:
https://doi.org/10.35551/PFQ_2026_2_4Keywords:
central bank digital currency, monetary transmission, dynamic stochastic general equilibrium model, bank intermediation, financial stability, E42, E52, E58, E44, G21Abstract
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.
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