Hungary Flirts With CBDC, Eyes Financial Inclusion

• Hungary is considering the potential benefits of launching a central bank digital currency (CBDC) to reach unbanked citizens.
• 114 countries are exploring CBDC projects, including the digital yuan, dollar and euro.
• Anikó Szombati, the chief digital officer of the Hungarian Central Bank, remarked that while there is no need for a widespread adoption of a retail CBDC, they are conducting pilot projects to explore its potential.

Hungary Considering CBDC

Hungary is currently assessing the possibility of introducing a central bank digital currency (CBDC), in order to facilitate access to financial services for unbanked citizens. This follows other countries such as Thailand and South Korea who have also launched pilot programs for their respective CBDC projects.

Global Trend

The research conducted by the Bank for International Settlements (BIS) revealed that approximately 90% of central banks worldwide have begun examining the feasibility of implementing a CBDC project. In addition, 114 countries are actively exploring these projects and have already launched initiatives such as the digital yuan, dollar and euro.

Pilot Projects in Hungary

Anikó Szombati, chief digital officer at the Hungarian Central Bank stated that although there is no immediate need for a widespread adoption of a retail CBDC by ordinary citizens and merchants, they are conducting pilot projects to investigate its potential impact on financial inclusion in Hungary. Currently 13% of Hungarian adults do not possess access to bank accounts.

Motivation Behind Introducing CBDCs

Szombati highlighted that when evaluating whether or not to launch a specific project involving a CBDC, it should be motivated by either an urgent market failure or robust policy objective. She suggested one possible incentive could be increasing financial inclusion among Hungarian citizens through providing them with access to banking services via cryptocurrency payments if needed.

Adoption of Euro

Despite being part of EU member state and required to adopt euro eventually – Hungary has yet not set any specific timeline towards replacing its national currency – Forint with Euro currency .