The Swedish government is considering creating a digital version of the krona, a minister said on Dec. 11.
According to Bloomberg, Sweden’s financial markets minister Per Bolund said today the government is studying the creation of a central bank digital currency along the lines of China’s digital yuan renminbi or e-CNY. However, the Nordic state won’t decide on an e-krona until November 2022.
The European Union is both ahead and behind. One the one hand, testing of an e-euro has begun, largely under the auspices of France, which is eager to launch a European CBDC. And Christine Lagarde, president of the European Central Bank, confirmed in September that the trading bloc is actively exploring “the benefits, risks and operational challenges” of an e-euro. On the other, there’s no set deadline for a decision.
The Swedish review of CBDC implementation will be led by Anna Kinberg, a former chairwoman of the finance committee of the country’s central Riksbank. The first reports suggesting that the Scandinavian country was moving towards issuing its own CBDC were released in late January 2018.
As Modern Consensus reported in late February, at the time the central bank was already testing a mobile app for the e-krona at the time with consulting giant Accenture. The collaboration between the two is already contracted to continue at least until February 2021. The app simulates holding the digital currency in a digital wallet, making payments, deposits, and withdrawals. Payments also support wearable devices, such as smartwatches and cards.
Still, the pilot project conducted with app development by the Riksbank is just a part of a broader effort to determine whether issuing a CBDC is a good idea in the first place.
That said, Sweden is a lot closer to a digital currency than many other countries are in one big way: it is already a largely cashless society. Long-declining use of banknotes and coins was dramatically accelerated by the COVID-19 pandemic, with Reuters reporting in late October that just 9% of Swedes’ said they used cash for their last transaction, according to the Riksbank. And only 50% had used cash for any purchase in the previous 30 days.
Bolund explained that accessibility is a top priority when it comes to Riksbank’s e-krona implementation. He said that “it’s crucial that the digitalized payments market functions safely, and that it’s available to everybody.” He also highlighted that the implementation of a digital currency may have far-reaching consequences and its launch is not a decision that should be taken lightly:
“Depending on how a digital currency is designed and which technologies are used, it can have large consequences for the entire financial system.”