Hungary is not in a hurry to develop a central bank digital currency (CBDC) for widespread use, but is testing to see if it could benefit the unbanked. The country’s Chief Digital Officer, Anikó Szombati, said at an event hosted by think tank the Official Monetary and Financial Institutions Forum that “for the moment we don’t see any imminent need for large scale retail CBDC to be introduced” by regular citizens and merchants. However, Hungary is exploring the possibilities of issuing a CBDC through a series of pilots and wants to remain at the forefront of CBDC research.
Other European countries, such as the UK and the European Union, are more actively exploring the potential benefits of digital currencies. The European Central Bank is expected to decide later this year whether to start developing a digital euro, while the Bank of England has said a digital pound is “likely” to be needed in the future. According to studies by the Bank for International Settlements, nine out of ten central banks around the world are exploring a CBDC.
Hungary’s membership in the European Union (EU) means it is obliged to join the euro at some point, but it has not yet set a date for abandoning its own currency, the forint. This raises questions about whether Hungary would be able to introduce its own digital currency without causing conflict with the EU’s broader plans for a digital euro.
Some experts argue that introducing a CBDC could help Hungary’s economy by making transactions cheaper and faster. However, others have expressed concerns about the potential risks of a CBDC, such as increased financial instability and cybersecurity threats. The introduction of a CBDC could also have significant implications for the country’s banking sector, which may see its role change significantly as digital currencies become more widespread.
While Hungary may not feel the need to introduce a CBDC on a large scale at present, it is clear that central banks around the world are increasingly exploring the potential benefits of digital currencies. As the world becomes more digital, it is likely that these currencies will play an increasingly important role in the global economy, and Hungary may eventually need to decide how it wants to fit into this changing landscape.