Sweden’s Riksbank is assessing e-krona, a new form of digital currency that hopes to take the country a step closer to the creation of the world’s first central bank digital currency (CBDC), according to reports on Thursday (Feb. 20).
The e-krona could eventually be used for banking functions — payments, deposits, withdrawals — from a digital wallet, Riksbank said. This announcement comes following last month’s announcement of the Riksbank joining the World Economic Forum’s Blockchain think tank at this year’s Davos WEF summit.
On an international level, agencies are collaborating on the necessity of issuing CBDCs. “The aim of the project is to show how an e-krona could be used by the general public,” Riksbank said.
CBDCs are a digital form of traditional money issued and governed by a country’s central bank. Cryptocurrencies — like bitcoin — are “produced by solving complex maths puzzles and governed by disparate online communities instead of a centralized body,” reports said.
Making payments in e-krona will be “as easy as sending a text,” Riksbank said on its website.
Because Sweden doesn’t rely on cash, it is a litmus test for central banks regarding the use of printed money. The issuance of e-krona, which is being developed by consulting firm Accenture, would simulate its use in an “isolated test environment.”
Just 1 percent of the Swedish gross domestic product (GDP) existed in banknotes in 2018, Riksbank data shows.
The pilot will run until February 2021 and will use blockchain technology, the Riksbank said.
More than 50 percent of banks in Sweden don’t have physical cash in their vaults. Payments usually take place with credit, debit cards or mobile payment apps. Cash accounts for 20 percent of merchant transactions.
In April, the Riksbank wanted the government to create a committee to move forward regarding the definition of legal tender.