And finally…Sweden to establish national e-currency

With cash usage on the decline in Sweden the Riksbank started a project in the spring of 2017 to examine the scope for the creation of a central bank digital currency (CBDC).

Now the central bank says an electronic currency to be known as the e-krona could ensure that the general public will still have access to a state-guaranteed means of payment.

“Adopting a position on whether Sweden should introduce an e-krona will take time,” the Bank says. “But at the same time, the analysis work needs to continue to increase the Riksbank’s knowledge of the consequences of an e-krona and technological solutions need to be developed and tested.”

The Riskbank is proposing to:

Begin to design a technical solution for an e-krona in order to test which solutions are practicable and possible to realise

Draw up proposals for legislative amendments needed to clarify the Riksbank’s mandate and an e-krona’s legal standing

Continue investigating the financial aspects of an e-krona.

The Bank envisages an electronic currency that can either be held in an account at the Riksbank (account-based) or be stored locally, for example on a card or in a mobile phone app (value-based). A value-based e-krona is compatible with the Sveriges Riksbank Act, but the team behind the project say the Act would need to be amended for an account-based e-krona. “Developing one or more possible technical solutions for an e-krona would provide the Riksbank with greater room for manoeuvre and knowledge prior to a decision on whether or not to issue an e-krona,” states the Bank.

“A preliminary technical solution for the e-krona should focus on a value-based e-krona without interest and with traceable transactions. The Riksbank should also continue investigating an account-based e-krona which would require coordination with other authorities. It is reasonable that a system for an account-based e-krona is built in agreement and perhaps together with other authorities.”