The central bank of Sweden is moving forward with plans to create a new technical framework capable of issuing the e-krona, a new electronic currency.
With Sweden being one of the major European countries pioneering the way towards becoming an increasingly cashless society, the Riksbank, Sweden’s central bank, launched a project in the spring of 2017 with the aim of creating a central bank digital currency (CBDC). The scope of this proposal is to guarantee all Swedish citizens access to a state-warranted means of payment.
In a statement, the bank said: “Adopting a position on whether Sweden should introduce an e-krona will take time […] 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.”
According to the latest news, Sweden’s central lender is proposing to design a technical solution sustainable enough for the e-krona, in order to understand which solutions are feasible.
The Riksbank will also oversee the preparation of legislative amendments required to elucidate the currency’s legal standing, as well as the lender’s mandate.
The central bank will furthermore look into the financial possibilities and capabilities of the e-krona as a sustainable mode of payment.
The Swedish lender proposes that the electronic currency be stored in one of two possible ways: account-based (stored in an account at the Riksbank), or value-based (held locally on a card or mobile phone application).
Whilst the value-based mode of storage is in compliance with the Sveriges Riksbank Act, the account-based method requires the act to be amended, according to the team leading the project.
The bank stated: “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.
“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.”
As several societies push forward for the use of cashless transactions for the payments of goods and services, a recent IBM survey polling 21 central banks found that 38% are actively conducting research on CBDCs. However, while most participants believed that central banks should issue their own CBDCs, the consensus as to how the electronic currencies should be sanctioned remains unclear.