30 September 2021

Celebrating the 20th anniversary of the publication of our journal, the periodical has been renewed. In addition to the usual studies, we are launching a new section entitled “Our Vision”, the first essay of which focuses on the introduction of the euro. Another important step in the renewal process is the publication of feature articles in two new columns entitled “Challenges of the 21st Century” and “Market Megatrends”. In the September issue, the first article analyses Romania’s convergence process, while the second addresses the current role of gold.

In his essay, Péter Gottfried discusses the euro: since Hungary undertook to adopt the euro, the question is not whether to adopt it, but when and under what conditions. Recent years have demonstrated the resilience of the euro to the crisis, but also that it alone does not guarantee sustainable convergence. Therefore, Hungary’s strategic goal should not be to introduce the euro, but to adjust the timing of the introduction of the euro to the strategy of sustainable convergence. In addition to reducing and then keeping the general government deficit low, it is worth continuing to catch up, so that we can start from a level of competitiveness that provides as much safety as possible at the time of introduction.

In their study, Klaudia Rádóczy and Ákos Tóth-Pajor examine the reactions of investors in extreme cases in the Hungarian capital market. In the course of their work on data of the nine most liquid shares traded on the Budapest Stock Exchange, they come to the conclusion that investor overreactions to extreme events can also be identified in the Hungarian capital market. They also find that developing a contrarian strategy can generate profits for investors after extreme events, as in most cases losing portfolios beat the market in the 21-day period following extreme events.

The study by Márton Gosztonyi explores the ownership network of entities present on the Budapest Stock Exchange in 2020 as issuers, using the tools of network research. In the simulation-based capture of the network, not only the network of relations between listed issuers is analysed, but also the ownership relations of those companies connected to the network which are not listed on the stock exchange; therefore, the study deals with the stock-exchange ownership network in its entirety. The overview can help obtain a clearer picture of the interlinkages and clusters of listed companies that can provide a basis for subsequent analyses.

Although the change in the premium for motor third-party liability insurance (MTPL) affects a wide range of society, there was no precise information on its level until publication of the MTPL index this year. In their study, Gabriella Merész, Norbert Holczinger and Koppány Nagy describe the statistical and methodological aspects taken into account when creating the index and the relevant characteristics of the Hungarian MTPL stock. We can also learn how the method gives a comprehensive picture of market processes and how it removes distortions due to changes in the vehicle fleet. Based on the index adjusted for changes in claims and taxes, the wedge between fees and claims opened up in 2020.

The study by Kata Plöchl and Csilla Obádovics focuses on a current, prominent social area in the western and central regions of Hungary by examining those applying for Home Purchase Subsidy. Each group of claimants is identified based on their income and the value of their property, giving a detailed description of their family size and real estate buying habits. The authors conclude that child pre-commitment is most common among those with the most modest income and low-value real estate. The support gives them the greatest help in creating a home. In the developed region examined, 8 per cent of the beneficiaries buy another property in addition to their existing one.

In her feature article, Katalin Kis analyses the advantages and disadvantages of the Romanian economic convergence process of the last decade. Convergence was faster than economic growth, to which the significant decline in population and statistical effects also contributed, in addition to dynamic GDP growth. However, rapid convergence also led to a deterioration in equilibrium indicators.

In their article, Ádám Banai, Pál Péter Kolozsi and Sándor Ladányi show how the role of gold has changed over recent centuries and what role it can play in the digital age. The authors present the re-strengthening of the reserve instrument function, as well as the considerations that can ensure maintaining the age-old trust in gold during the 21st century revolution of money.

In addition to these, the September issue of the Financial and Economic Review contains three book reviews, as well.

This publication is available on the website of the Financial and Economic Review:

https://en-hitelintezetiszemle.mnb.hu

We wish you a very pleasant reading.

Magyar Nemzeti Bank