The Swedish government has pressed the button to replace the national currency crowns with the digital currency. Per Bolund, Swedish Financial Markets Minister announced that the project is planned to be implemented in 2022.
What are the Reasons for Sweden to Switch to a Digital Currency?
Sweden's digital currency initiative emerged as the trend towards digital payments accelerated. The Riksbank reported in October that less than one-tenth of all payments in the country were made in cash. This is the lowest in Swedish history. The central bank said that the trend of not using cash is getting stronger as the epidemic accelerates the transition to digital payments. In line with the public's demand for cashless payments, Riksbank launched a pilot project with Accenture to design an electronic krona or e-krona based on digital ledger technology that can work as a cash complement.
In October 2019, Stefan Ingves, manager of Riksbank, expressed his thoughts on e-krona, saying that it is entirely possible to make e-krona a legal tender:
“My view on how the Swedish payment system will look in the future can be explained as follows; There must be a legal definition of what makes the electronic legal bidding and that is a legal payment to the e-chronic given by the state through Riksbank. Further, it should be possible to pay in real-time with e-krona and also make small transactions between currencies at least 24/7.”
How will the Currency be Implemented
Sweden already has a pilot plan for its digital currency. However, it is still unclear whether it will be implemented and its specific implementation. Sweden is slowly moving towards its own digital currency. Sweden first announced its e-krona targets in March 2017. Already one of the world's most cashless societies, the country was one of the first to consider issuing a digital currency.
With a new move, the Swedish government announced the launch of a review of the feasibility of the project, which continues on December 11th. Bloomberg reported that Anna Kinberg Batra, former chair of Riksbank's finance committee, led the review process. The process will conclude in late November 2022. The country is currently testing the e-krona pilot with Accenture Plc. The test has been researching how the public will go to a CBDC since February 2020. The test will end in February 2021.
In an earlier document detailing the pilot testing, the Riksbank highlighted the problems in society with the constant withdrawal of cash. Therefore, any future e-krona is expected to complement the cash. Swedish lawmakers will make the final decision later on whether the e-krona will be launched on the market.
Steps Towards Digital Currency Around the World
While Sweden was one of the first countries to consider CBDC, the launch by the Bahamas came before. Earlier this year, the island nation recently launched the Sand dollar to help facilitate transfers between the archipelago. However, no major world economy has started living with their CBDCs yet.
It is known that Sweden, China, EU and USA all research digital currencies. European Central Bank President Christine Lagarde recently expressed the need for a digital euro. She said that such a project would help protect the EU's monetary sovereignty in the face of both international and private competition.
Meanwhile, China is seen as the most developed country in terms of CBDC development. The country has been running major pilot tests for months, and thousands of members of the public have had the opportunity to test the digital yuan in real-world locations.
Bibliography
Kaaru, Steve. “Sweden Launches Review on Possible Switch to e-Krona.” CoinGeek, 16 Dec. 2020, coingeek.com/sweden-launches-review-on-possible-switch-to-e-krona/
Kuznetsov, Igor. “Sweden Eyes Transition to Digital Currency Amid Steady Decline in Use of Paper Money.” Sputnik International, Sputnik, 14 Dec. 2020, sputniknews.com/europe/202012141081449854-sweden-eyes-transition-to-digital-currency-amid-steady-decline-in-sputniknews.com/europe/202012141081449854-sweden-eyes-tuse-of-paper-money/
Lindeberg, Rafaela, and Ott Ummelas. “Sweden Explores Moving to a Digital Currency.” Bloomberg.com, Bloomberg, 11 Dec. 2020, www.bloomberg.com/news/articles/2020-12-11/sweden-explores-the-feasibility-of-moving-to-a-digital-currency
Sharma, Rakesh. “Sweden Takes Another Step Toward a Digital Currency.” Investopedia, Investopedia, 14 Dec. 2020, www.investopedia.com/sweden-takes-another-step-toward-a-digital-currency-5092069
