Sweden's central bank is pushing ahead with plans to build a technical framework for the issuance of a new electronic currency, the e-krona.
The Riksbank started a project in the spring of 2017 to examine the scope for the creation of a central bank digital currency (CBDC), With cash usage on the decline in Sweden, the central bank says an electronic currency could ensure that the general public will still have access to a state-guaranteed means of payment.
"Adopting a position on whether Sweden should introduce an e-krona will take time," states the Bank. "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."
With this in mind, the Riskbank is proposing to:
- Begin to design a technical solution for an e-krona in order to test which solutions are practicable and possible to realise
- Draw up proposals for legislative amendments needed to clarify the Riksbank's mandate and an e-krona's legal standing
- Continue investigating the financial aspects of an e-krona.
The Bank envisages an electronic currency that can either be held in an account at the Riksbank (account-based) or be stored locally, for example on a card or in a mobile phone app (value-based).
A value-based e-krona is compatible with the Sveriges Riksbank Act, but the team behind the project say the Act would need to be amended for an account-based e-krona.
"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," states the Bank. "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."
A recent poll of 21 central banks by IBM, found 38% are actively conducting researching and trialing CBDCs. But while most of the respondents believe central banks should be issuing their own CBDCs - with a particular emphasis on the wholesale interbank markets - there remains no clear consensus on the governance issues associated with digital fiat.