From drab cash to digital currency; Sweden assembling CBDC (not from IKEA)
Sweden has long been at the forefront of the move towards a cashless society and is recognised as one of the most cashless economies in the world.
Fast-forward past the peak of the COVID-19 pandemic and now, according to Sweden’s Central Bank’s (the Riksbank), less than 10% of all payments are being made with cash. Now the central bank's recent reports strongly suggest that the country will issues a CBDC before it stops printing cash and stamping coins.
Sweden's strides in CBDCs
In early 2019, the Riksbank signed a deal with multinational professional services company Accenture to begin a pilot testing its CBDC, the e-krona, which will be based on R3’s Corda DLT platform.
More recently on 11 December 2020, Financial Markets Minister, Per Bolund, stated that a review into the feasibility for moving into a digital currency has commenced and is due to be completed by the end of November 2022. This will run concurrently with the pilot project with Accenture.
The design is essential, officials say
If one was to review the current global landscape of CBDCs, it would emphasise there is no single model for sovereign digital currency design.
For Sweden, Bolund highlighted that above all, its crucial to ensure the country's digital payments system functions in a safe way and is “available to everybody.”
Depending on how a digital currency is designed and which technologies are used, it can have large consequences for the entire financial system, the minister said.
In October, Riksbank Governor Stefan Ingves confidently agreed that an e-krona should be issued by the central bank and recognised as legal tender. But, the governor has also emphasised that bank cannot be the only institution to decide the future of an e-krona implementation:
Considering how economically important the issue is, the Riksbank cannot take the decision on its own as to whether an e-krona should be introduced and, if so, in what form. It is a decision that must have substantial political support.
Both official's comments reflect a foray into the world of retail payments as the country continues its move towards a truly cashless society.