Geopolitical tensions supplanting globalization, the spread of artificial intelligence and recurring global supply shocks are creating fresh challenges for central banks, delegates heard at the Budapest Financial Summit organized by Magyar Nemzeti Bank (MNB) on 16 September 2026. Presentations by MNB Governor Varga Mihály and Central Bank of the Republic of Turkey Governor Fatih Karahan set out how these trends force a rethink of instruments for price and financial stability.
Key messages from the governors
Varga Mihály argued that rapid technological progress, climate change and shifting trade links bring both previously unseen opportunities and risks. He said the surge in global supply shocks has uneven economic consequences across countries that directly affect inflation, financial stability, investment and the real economy. For that reason, Varga urged policymakers to move beyond established frameworks and place greater emphasis on cooperation and knowledge sharing.
As part of that push, Varga announced that the MNB is launching a recurring international knowledge-sharing platform under the Financial Summit to support the bank’s ambition to act as an east–west bridge. He also cited a practical example: an MNB AI-based central fraud-detection system that examined 390 million bank transactions and identified more than 7,000 potential abuses.
Fatih Karahan said the global economic model has shifted from prioritizing efficiency to prioritizing security. Whereas earlier waves of globalization supported cost reduction and disinflation, he said, control over shipping routes, payment systems and raw materials has become more important. Building parallel capacities to ensure security, Karahan added, typically involves sacrificing some efficiency and accepting higher costs.
Karahan warned that central banks now confront overlapping and persistent geopolitical and natural shocks rather than one-off, quickly fading events. These sustained shocks become embedded in inflation expectations and affect exchange rates, he said, so central banks cannot simply wait them out but must adapt actively.
Reserve management and the rising role of gold
The move toward security and fragmentation is changing reserve composition and accelerating diversification. Karahan noted that although gold has not replaced the dollar, its share in central bank reserves has risen — from about 11 percent in the preceding decade to 29 percent since 2020. He stressed that beyond the traditional reserve criteria of safety, liquidity and yield, accessibility has become a fundamental consideration.
Karahan also pointed out a practical trade-off: repatriating gold can increase physical security, but it also carries risks because domestic markets may not be deep enough to absorb rapid, large-scale sales in a stress scenario.
Conclusion: resilience as the primary mandate
Both speakers concluded that in a more fragmented, shock-prone world the principal common task for central banks is to enhance economic resilience. Strengthening resilience is essential for maintaining mandates on price stability and financial stability going forward.
This article was prepared with the assistance of an AI tool; the final content was edited and verified by our journalist.
