Sweden's central bank prepares for a cashless future with e-krona

The Swedish Central Bank continues to work on the e-krona project. For more than a year, the commission has been studying the technical possibilities for issuing a national digital currency.

Riksbank started the project in spring 2017 to explore the possibility of creating a central bank digital currency (CBDC). The project itself was divided into three stages. The first stage - analytical, was completed this year, but left a number of issues unresolved. As a result of the first stage, the Swedish central bank Riksbank published a report in which it noted:  

It will take time to take a position on whether Sweden will introduce the e-krona, but in the meantime, analytical work should continue to increase the Riksbank's knowledge of the consequences of introducing the e-krona, and technological solutions must be developed and tested

Riksbank is proposing a robust program of technical solutions development for a comprehensive e-krona concept, which, is expected to enable the bank to make an informed decision about issuing an electronic national currency.

In the bank's view, the pilot project should include:

⁃ development of a technical solution for the electronic krona to test which solutions are feasible and their possible implementation;

 ⁃ proposals for legislative changes necessary to clarify the powers of the Riksbank and the legal status of the electronic krona;

 ⁃ study of the financial aspects of the impact of the introduction of the electronic crowns into circulation.

The team behind the project envisions a digital currency that can be stored in Riksbank accounts to which bank cards will be linked. Cryptocurrency accounts can be managed through online banking or mobile phone applications. In the future, e-krona should become the dominant means of payment, allowing citizens of the country to pay for goods and services on a daily basis.

However, the implementation of the project has been delayed and the Central Bank of Sweden recommended speeding up work on the creation of a new financial instrument.

Sweden is not alone in its desire to issue a centralized digital currency.

A recent global survey by IBM among Central banks of different countries  showed that 38% of financial institutions are actively conducting research and testing of CBDC.. Most respondents believe that national banks should issue their own CBDCs - with a particular focus on wholesale interbank markets, but there is still no clear consensus on the governance issues associated with digital currencies and a clear opinion on their impact on the existing financial system.