Swedish Riksbank is deciding on whether to issue a digital currency as a move to curb the difficulty in accessing the central bank’s money and fast decline in the use of cash in Sweden.
According to the reports by Financial Times, there is a dramatic drop in the use of cash in Sweden, where the amounts of notes and coins in circulation has fallen by 40 per cent since 2009. The Scandinavian bank hopes to take a decision on whether to start issuing what it calls an ‘e-krona’ – digital currency – in the next two years.
“Will we have e-krona in an e-wallet in the future, as naturally as we now have a wallet with cash in it? The less those of us living in Sweden use banknotes and coins, the clearer it becomes that the Riksbank needs to investigate whether we should issue electronic money as a complement to the money we have today,” Deputy Governor Cecilia Skingsley said, speaking at FinTech Stockholm on Wednesday.
She also stated that the bank will need to work within three different areas at once, where at first, the bank will identify what technologies can be used, including investigating both decentralized and centralized alternatives. The bank will investigate in what way payments in e-krona can be initiated: with smartphones, plastic cards or in other ways.
Secondly, she stated the area as policy issues that involve studying the potential effects on the Riksbank, the payment market, monetary policy, financial stability, among others. The third area concerns legal issues like examining the opportunities and flexibilities that the Riksbank’s current mandate allows, how different laws affect the requirements on e-krona system, and so on.
Talking about the objectives of the bank in bringing a digital currency, Skingsley stated, “Riksbank's plans for an e-krona is that the Riksbank is not intending to abolish banknotes and coins, but is considering supplementing them with another service to the general public. We are also doing this for the people who do not have, do not want to have, or cannot have access to the current version of the payment system, so that they can also manage their payments safely and efficiently.”
