As István Simon described,[1] the current regulatory framework on the Hungarian Central Bank (HCB), the Fundamental Law of Hungary (FLH)[2] is a so-called ‘core constitution’, which directs the Parliament to pass cardinal laws on subjects specified within it. In line with this, the HCB is regulated by cardinal act,[3] which regulate fiscal rules. However, some such rules were incorporated directly into the FLH. Unlike the previous Constitution,[4] which did not contain regulations on the currency, Article K) of the FLH declared that Hungary’s official currency is the forint. As Simon argues, while the previous Constitution was neutral in terms of economic policy - as well as in other issues - the Fundamental Law is not.[5] In his view, the causes of the constitutional and policy changes were rooted in the crisis before 2010.[6] Simon argues that while it has a symbolic meaning and practical importance, i.e. the forint fulfils the functions of money in Hungary, but what is even more important changing the legal tender of Hungary would mean amending Fundamental Law, which requires at least a two-thirds majority vote and thus the existence of proper democratic legitimacy. Others, however, contest this decision of the drafters, arguing that this provision runs counter to the obligations arising from the founding treaties of the European Union, since, upon accessing the EU, Hungary agreed to adopt a common currency. A quick research done by the author on the constitutional and statutory rules of the V4 revealed that the constitutions of the Czech Republic,[7] Poland,[8] Slovakia[9] do not nominate legal tender; instead, they are regulated by their statutes on their central banks. Article 13 of the Czech National Bank Act[10] states that the Czech Republic’s legal tender should be the Czech Koruna. Article 31 of the Polish National Bank[11] law states that the currency of the Republic of Poland should be banknotes and coins, denominated in złoty and grosz. Article 15(1) of the Act on the Slovakian National Bank[12] states that Slovakia’s legal tender should be the Euro. Thus, one may argue that the solution chosen by the drafters of the FLH is unusual, or ‘unorthodox’, since even the Czechs, who are the most dismissive of the idea of a common currency among the V4 countries,[13] dispensed with regulating the national currency in the constitution, which would make it impossible for a government without a qualified majority to introduce the Euro, like the FLH. The author of the current study is of the view that what Simon identifies as a wise regulatory choice by the drafters of the FLH is undesirable, since once a situation may occur in which the country cannot access the Eurozone despite being mature enough in terms of real convergence and having the political will to do so.
Supporting the of the government’s economic policy by the central bank
The author conducted some research on the constitutional and statutory rules of the V4 to explore whether they contain a phrase similar to the HCB Act, according to which the HCB should facilitate the government’s economic policy. As Simon reiterated,[14] Article 127(1) of the TFEU contains a similar provision[15] related to the ECB. The above research reveals that both the Acts on the Czech Central Bank and the Polish Central Bank contain a regulation almost identical to the Hungarian one. While Article 98(1) of the Czech Constitution provides that the primary purpose of the Czech Central Bank shall be to maintain price stability, sentence two of Article 2(1) of the Act on the Czech National Bank states that:
‘Without prejudice to its primary objective, the Czech Central Bank shall support the general economic policies of the Government leading to sustainable economic growth and the general economic policies in the European Union with a view to contributing to the achievement of the objectives of the European Union.’
Meanwhile, based on the third sentence of Article 227(1) of the Polish Constitution, the Polish Central Bank ‘[…] shall be responsible for the value of Polish currency’. Article 3(1) of the Act on the Polish National Bank states that the basic objective of the Polish Central Bank is to maintain price stability while supporting the economic policy of the government, insofar as this does not constrain the pursuit of the Polish Central Bank. Article 56 of the Slovakian Constitution, which contains provisions for the Slovakian Central Bank, does not mention price stability. Article 2(1) of the Act on the Slovakian Central Bank states, ‘The main goal of the Central Bank of Slovakia is to maintain price stability. For that purpose, the Central Bank of Slovakia participates in the common monetary policy determined by the European Central Bank for the Eurozone […]’. Article 41a(1) of the Act of the Slovakian Central Bank reflects the provision in Article 127(1) of the TFEU when stipulating that, as part of the Eurosystem, the Slovak Central Bank supports the general economic policies of the EU with the intention of contributing to the achievement of the goals of the EU without prejudice to maintaining price stability as its main goal.
The right to pay by cash
The importance and actuality of the issue is well-shown by the fact that while the European Commission proposed a digital Euro[16] several EU Member State’s government and legislation addressed the issue of the right to pay by cash. As for the V4 countries, while the Czech Government’s strive to incorporate such regulation into the constitution was unsuccessful – the Czech Senate turned down the proposal aimed at amending the constitution[17]– the currently enacted[18] Article 39a[19] of the Slovakian Constitution – as a main rule[20] – grants the right to pay by cash. As pointed out by Miroslav Štrkolec this new rule may raise constitutional issues[21] whenever the proposed digital Euro – which is in a rather initial phase for the time being – will replace the ‘physical Euro’. However, as some argue one should not mistake the introduction of a digital currency as an alternative method of payment with the ban of paying by cash.[22] It is worth mentioning that the Commission’s proposal mentions the supplementing role of the digital Euro several times, but no mention is made of any ban or other rule that would make it impossible to pay by cash. Similarly, nothing suggest that the Eurosystem as a whole has such plans.[23] As for Hungary, the prime minister stated during a plenary sitting in February 2024 that the governing party will not hinder the proposal of the ‘Mi Hazánk Mozgalom’ (Our Homeland Movement) to grant constitutional right for paying by cash.[24] In May, the Committee on Justice of the National Assembly voted in favour.[25] However there is a long road ahead of the proposal. The governor of the Polish Central Bank asked the Polish Government in 2021 to grant the right to pay by cash.[26] – There is no information that any actual proposal before the Parliament was submitted.
It is worth mentioning that even the Court of Justice of the European Union addressed the issue of the restriction of paying by cash in its 2021 ‘Hessischer Rundfunk’ case. In its second question, the referring court asked whether:
‘[EU law] contain a prohibition precluding public authorities of a Member State from refusing fulfilment of a statutorily imposed payment obligation in [Euro] banknotes, or does EU law leave room for provisions that exclude payment in euro banknotes for certain statutorily imposed payment obligations?’
The CJEU in line with the Advocate General’s opinion[27] took the view that the relevant EU legal provisions should not be interpreted as precluding a national legislation which excludes the possibility of discharging a statutorily imposed payment obligation in banknotes denominated in euro, provided that [among other guarantees] it does not lead to a general discharge of a payment obligation in cash.[28]
[1] Simon, 2018, pp. 113–114.
[2] The Fundamental Law of Hungary (25 April 2011).
[3] Act 139 of 2013 on the Magyar Nemzeti Bank (the HCB Act).
[4] Act XX of 1949.
[5] As József Szájer, who chaired the committee responsible for drafting the FLH, argues in his memoirs it is a value-based constitution in other regards as well: Szájer, 2014, pp. 736–737, 774–775; see also: Árva, 2022; Kiss, 2023, p. 424; Jakab, 2011, p. 379.
[6] Simon 2018, p. 114.
[7] Ústava České republiky č. 1/1993 Sb. (16. prosince 1992).
[8] Konstytucja Rzeczypospolitej Polskiej (2. kwietnia 1997).
[9] Ústava Slovenskej republiky (1. septembra 1992).
[10] Zákon č. 6/1993 Sb. o České národní bance.
[11] Ustawa z dnia 29 sierpnia 1997 r. o Narodowym Banku Polskim.
[12] Zákon 566/1992 (z 18. novembra 1992) o Národnej banke Slovenska.
[13] Eurobarometer – Introduction of the Euro in the Member States that have not yet adopted the common currency [Online]. Available at: https://europa.eu/eurobarometer/surveys/detail/2187 (Accessed: 16 July 2024); Republikon Intézet, 2022, p. 5.
[14] Simon, 2018, p. 137.
[15] ‘Without prejudice to the objective of price stability, the ESCB shall support the general economic policies in the Union with a view to contributing to the achievement of the objectives of the Union as laid down in Article 3 of the Treaty on European Union.’
[16] uropean Commission, Proposal for a Regulation of the European Parliament and of the Council on the establishment of the digital euro. Brussels, 28.6.2023 COM(2023) 369 final; See: Demertzis andMartins, 2023.
[17] Andrš, 2023, [Online].
[18] Zákon 241/2023 (15. júna 2023) ktorým sa dopĺňa Ústava Slovenskej republiky č. 460/1992 Zb. v zneníneskorších predpisov.
[19] Article 39a (1) ‘The issue of cash as legal tender shall be guaranteed.’
(2) ‘Everyone shall have the right to make payment for the purchase of goods and the provision of services in cash as legal tender, and the acceptance of such payment may be refused only on reasonable or generally applicable grounds. The right to make a cash transaction at a bank or branch of a foreign bank shall be guaranteed.’
(3) ‘The law shall lay down the conditions and limitations of the right under paragraph (2).’
[20] Under the new regulation, the trader – except for banks – has the right to refuse payments in cash for resons set out in law, e.g. for security or technical reasons. – Andrš, 2023, [Online].
[21] The presentation of Professor JUDr. Miroslav Štrkolec, PhD at the Conference titled: The Interaction of National Economic Governance with the EU Integration and Contested Areas (Budapest, 26-27 October 2023).
[22] Barczikai F. (2024) Alaptalanul Mossa Össze a Mi Hazánk a Digitális Pénz Bevezetését a Készpénz Betiltásával. Lakmusz, 2024. június 8. Online [Available at]: https://www.lakmusz.hu/alaptalanul-mossa-ossze-a-mi-hazank-a-digitalis-penz-bevezeteset-a-keszpenz-betiltasaval/ (Accessed: 16 July 2024).
[23] Zamora-Pérez, 2022, [Online].
[24] MTI | Portfolio: Orbán Viktor szerint nem lesz akadálya, hogy alkotmányba foglalják a készpénzhasználat jogát Magyarországon 2024. február 27. Online [Available at]: https://www.portfolio.hu/bank/20240227/orban-viktor-szerint-nem-lesz-akadalya-hogy-alkotmanyba-foglaljak-a-keszpenzhasznalat-jogat-magyarorszagon-671409 (Accessed: 16 July 2024).
[25] Portfolio A készpénzhasználat alkotmányos jog lehet Magyarországon, jön a szavazás (2024. május 22.) Online [Available at]: https://www.portfolio.hu/uzlet/20240522/a-keszpenzhasznalat-alkotmanyos-jog-lehet-magyarorszagon-jon-a-szavazas-687383 (Accessed: 16 July 2024).
[26] NFP, Polish central bank wants legally guaranteed right to pay by cash. Online [Available at]: https://notesfrompoland.com/2021/04/19/polish-central-bank-wants-legal-guarantee-of-right-to-pay-by-cash/ (Accessed: 16 July 2024).
[27] With special regard to Paragraph 98 of the Advocate General: ‘[…] while the exclusive competence conferred on the Union with regard to the single currency allows it to determine the concept of legal tender – which, as will be seen in the next section, directly concerns the use of money as a means of settling monetary debts – that exclusive competence does not go so far as to include a general competence to regulate the procedures for settling pecuniary obligations, whether under private law or public law, which has been left to the Member States.’ – CJEU, C‑422/19 and C‑423/19, Johannes Dietrich and Norbert Häring v. Hessischer Rundfunk, Opinion of Advocate General Pitruzzella, 29 September 2020.
[28] CJEU, C‑422/19 and C‑423/19, Johannes Dietrich and Norbert Häring v. Hessischer Rundfunk, Judgment of the Court of Justice, 26 January 2021.
References
Andrš, E. (2023): The Right to Pay in Cash in Europe Comparative Study Digital watchdog II. Project of Iuridicum Remedium (IuRe). Online [Available at]: https://digitalnisvobody.cz/wp-content/uploads/2023/12/RIGHT_CASH_iure_23.pdf (Accessed: 16 July 2024).
Árva, Zs. (2022) Nagykommentár Magyarország Alaptörvényéhez. Budapest: Wolters Kluwer.
Demertzis, M., Martins, C. (2023) The value added of central bank digital currencies: a view from the euro area, Bruegel Policy Brief, 12 June 2023. [Online]. Available at: https://www.bruegel.org/policy-brief/value-added-central-bank-digital-currencies-view-euro-area (Accessed: 16 July 2024).
Jakab, A. (2011) Az új Alaptörvény keletkezése és gyakorlati következményei. Budapest: HVG-Orac.
Kiss, B. (2023) Útmutató az Alaptörvényhez. Budapest: ORAC.
Simon, I. (2018) ‘The Transformation of the Hungarian Fiscal and Monetary Constitution’, Annales Universitatis Scientiarum Budapestinensis de Rolando Eotvos Nominatae. Sectio Iuridica, 57(1), pp. 113–139; https://doi.org/10.56749/annales.elteajk.2018.lvii.10.113.
Szájer, J. (2014) Szabad Magyarország, szabad Európa. Újabb tizenöt év. Beszédek, írások, dokumentumok 1998–2013. Budapest: Szájer József európai parlamenti képviselő irodája.
Zamora-Pérez, A. (2022) Guaranteeing freedom of payment choice: access to cash in the euro area. ECB Economic Bulletin, Issue 5/2022. Online [Available at]: https://www.ecb.europa.eu/press/economic-bulletin/articles/2022/html/ecb.ebart202205_02~74b1fc0841.en.html (Accessed: 16 July 2024).
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