Cash & Liquidity ManagementCash ManagementSweden’s Riksbank considers digital currency

Sweden’s Riksbank considers digital currency

Sweden’s central bank is considering the possibility of issuing its own digital currency, according to reports although the technology it would use has not yet been decided.

The Financial Times said that the Riksbank, the world’s oldest central bank, has embarked on a project to determine the details of a central bank-backed digital currency and the resulting challenges. The paper added that the bank aimed to decide on whether to issue what is dubbed an ‘e-krona’ within two years.

The Riksbank said that it is under pressure to make the switch in response to the decline in domestic cash use by consumers and businesses in Sweden, where the number of notes in circulation has fallen by 40% since 2009.

Cecilia Skingsley, deputy governor at the Riksbank, said the bank is considering the trade-offs of various technologies. “We need to do the homework because it’s not an option for the public sector to stay on the sidelines and see the private sector cut off access to central bank money for individuals,” she added.

Skingsley did not mention blockchain specifically, although the FT reported that the technology was one of the options the central bank might consider. She said that the digital currency could be issued alongside banknotes and coins, but that Riksbank would not want to encourage illegal activity through the offering.

Confirmation that Sweden’s central bank is considering a digital currency follows the report issued in July by the Bank of England (BoE), which suggested that the UK’s economic output would be boosted by a blockchain-based digital currency, while the People’s Bank of China (PBOC) is among other central banks studying the concept.

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