Digital Euro Risks and Regulations Under Scrutiny

The European Union is actively developing the digital euro, a digital version of the euro, with its legal and regulatory framework still under construction. While the digital euro offers numerous benefits for individuals and institutions, it also poses a significant risk: it could become a tool for financial restrictions, potentially threatening personal freedoms.

According to the current EU legislative proposal, the digital euro will not allow so-called programmable spending rules, meaning users won't be restricted in how they spend their money. However, this proposal is not yet finalized, and critics argue that only a binding law can truly prevent the digital currency from being used for financial surveillance or restrictions.

Charles Hoskinson, the founder of the Cardano cryptocurrency, warns that a central bank digital currency based on the euro could turn into a "financial panopticon," a system that continuously monitors transactions and could even block certain payments. "Imagine trying to fuel up your car with 2000 euros on your account, but your card is declined with a message: 'Sorry, you've already bought 50 liters of fuel this month. No more purchases allowed,'" Hoskinson illustrated his concerns.

The final regulations regarding the digital euro are still being negotiated behind closed doors among the European Parliament, the Council representing member states, and the European Commission. Key issues under discussion include merchant fees and storage limits for individuals. While some officials assure that user privacy will be respected, these guarantees are not yet enshrined in law.

For Hungary, which is not yet part of the eurozone, the digital euro could still have significant implications. Many Hungarian businesses operate in euros, and the local banking system is closely tied to the European financial system. The digital euro could eventually appear in domestic banking services and cross-border transactions, though immediate changes for individual consumers are unlikely.

The European Central Bank plans to launch a 12-month trial program by the end of 2027, with a potential full rollout as early as 2029. The challenge for European policymakers is to ensure that the legal safeguards are robust enough to reassure those who demand concrete protections over mere assurances.