Slovakia Opposes Digital Euro Dominance
The European Central Bank’s ambiguity regarding the implementation and circulation of the digital euro has spurred Slovakian legislators to take preemptive action. Slovakia’s Parliament has ratified a constitutional amendment, reinforcing the right to transact with physical euros for goods and services within the nation’s borders.
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On June 15, the Slovakian Parliament overwhelmingly endorsed, with 111 votes, the right to use cash as a payment method within the country, regardless of circumstances. The constitution now reflects that “every individual retains the right to transact for goods and services using cash.” Legislators decided to take this step to safeguard cash transactions, in contrast to the ECB's plans of launching a digital euro that may eventually become the prevailing and irreplaceable payment instrument.
The constitutional changes were put forward by the “Sme Rodina” party (meaning “We Are Family” in English), a political group that promotes democratic values and rights to national identity.
One of the co-authors of the law, MP Miloš Svrček, during parliamentary debates, expressed that such amendments are essential to safeguard Slovakia's financial sovereignty and the interests of local market participants:
It is very important that there is a provision in the Constitution based on which we can defend ourselves in the future against any orders from the outside, saying there can only be digital euro and no other payment options
Liberal MP Marian Viskupič, who also voiced his concern over the potential exclusivity of the digital euro, supports this viewpoint:
It may be initially sold as an alternative, but gradually it will become apparent that it can only be exclusive
Viskupič perceives that the ECB, with the help of CBDCs, aspires to surveil the financial activities of each EU citizen, labeling the digital euro as a “social engineer's dream.” Representatives of the ultra-right wing in the Slovakian parliament share the fear that the digital euro could lead to a “total loss of confidentiality” and have thus supported the constitutional amendments.
More amendments on the horizon
In addition to the aforementioned changes, lawmakers are planning other amendments to the constitution that would allow store owners to refuse cash payments under certain conditions. This move aims to protect commercial points from robberies, reduce costs associated with cash handling, and address environmental and health issues (such as the spread of microbes via banknotes). This decision also intends to protect traders who, due to their technological set-up, are forced to accept only card payments (for example, via self-service terminals, vending machines, or mobile POS terminals).
Thus, lawmakers aim to support the freedom to use various payment instruments (not just one) and provide merchants the right to choose the payment methods they wish to accept at their points of sale.
Digital euro's paradox: Does it bring true resolution or create more complications?
Different institutions within the European Union have been studying the necessity of creating a Central Bank Digital Currency (CBDC) or a digital euro for some time. The majority of payment market experts across various European countries concur that the instrument currently proposed by the ECB is a solution that creates a problem rather than solving it. However, they do not rule out the implementation of a digital euro in some form in the future.
The most significant debates and criticism around the conception of developing and implementing a digital euro arise from the fact that this currency would be entirely centralized and monopolistically controlled by a single institution (the ECB). This implies a total surveillance of all transactions, which contradicts democratic values and effectively leads to the abolition of banking secrecy, infringing on the privacy rights of European Union citizens.
Simultaneously, any CBDCs pose a potential threat of revenue loss for banks and financial sector companies offering various credit solutions for citizens who do not have access to banking services due to various restrictions (age, credit scoring, etc).
The regulatory void surrounding digital euro usage – when will the legislation come to light?
Financial institutions of EU member countries and payment market operators were eagerly awaiting proposals from the EU Commission concerning the digital euro on June 28th. Everyone hoped to be reassured that a European CBDC would be an addition rather than a replacement for cash and cashless euros.
However, it turned out that the release of the draft document has once again been postponed – not for the first time. Earlier, proposals on the digital euro were expected in May.
The repeated deferral is reportedly associated with the leak of certain provisions of the bill concerning privacy and technical issues related to the functioning of the CBDC. Also, this decision was influenced by statements made by the finance ministers of various EU member countries last week, casting doubt on the necessity of such a move right now.
Once again, it becomes apparent that there is no consensus regarding the implementation of a digital euro, and this payment instrument seems to be causing more division than unity among European Union countries.
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