Digital currency revolution: Hungary prepares for the future with a digital forint
Shortly, digital currencies could reshape global financial systems, with the digital euro expected by November 2025. Meanwhile, the Hungarian Central Bank (MNB) is exploring the potential of a digital forint for wide-scale use, currently in a test phase for youth aged 8–14 since March of last year.
Digital forint in testing phase
The “Student Safe” (Diákszéf) mobile app, available nationwide since May last year, allows young people to manage digital forint transactions within the app, explained Anikó Szombati, head of MNB’s digital and fintech development, during the “Digital Hungary” event hosted by the Oeconomus Economic Research Foundation, Index reports. The MNB began researching digital central bank currencies around 2020 and published a study on the topic in 2021.
The MNB is exploring the potential of a digital forint for wide-scale use. Photo: depositphotos.com
While many central banks are examining digital currencies, most do so at a theoretical level. The MNB, however, has opted to practically test a local digital currency, with a focus on educating young users about responsible money management and digital payments. The goal is to develop a user-friendly and competitive app for digital currency transactions, potentially rivalling both traditional banks and major fintech players like Revolut.
Why digital currencies?
Central banks generally consider digital currencies for two primary reasons:
- Market gaps – to address banking and fintech access issues in countries with limited financial services.
- Strategic sovereignty – in the eurozone, for instance, the digital euro would help secure monetary independence from foreign digital currencies and major card companies, like Visa and Mastercard, which currently hold near-monopoly status in Europe.
A digital currency could also serve as a free payment tool for those in need. MNB’s digital currency rollout could make account services and transactions more affordable for households and businesses alike.
Digital currency a way to restore state control
Economist Zoltán Pogátsa noted that a central bank digital currency is not just a technological advancement but a way to restore state control over the currency. “Having a central bank digital currency essentially reclaims control over money for the state,” he remarked, explaining that most money in circulation today is issued through commercial bank lending, beyond effective state oversight.
The rise of “super apps” is also anticipated. According to György Mudri, CEO of FintechX Technologies, these apps will manage people’s lives beyond just banking, allowing financial transactions through integrated platforms.
Experts agreed that while cash usage will likely decline gradually, its complete disappearance is not yet feasible, nor is it an immediate goal for the central bank. Currently, 60% of transactions in Hungary are still cash-based, according to Zsolt Selmeczi, CEO of GIRO Plc. However, Pogátsa believes a cashless society should be encouraged, suggesting that in 30–40 years, the idea of carrying coins for payment will seem quaint.
By 2030, the MNB aims to reduce the proportion of cash transactions in Hungary to below 30%.
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