The Swedish government just published their first study on the implementation of a completely digital currency in Sweden, called the e-krona. This might be the most advanced exploration of a post-cash future by a large, western economy to date.
The e-krona project is being developed by Riksbank, which is the oldest operating central bank in Sweden, and the oldest in the world.
The Swedish government first introduced the e-krona idea in 2017, and now we have an initial pilot of this very ambitious project. Yet, one of the main conclusions of the report is that the e-krona requires much further investigation, and the final implementation could take years.
Are we getting closer to the implementation of the e-krona?
After previously indicating that it could be able to move forward with an e-krona by 2018, the Riksbank has now stated that the new pilot project will not be finished until early next year. It has even given itself the option to try again until the end of 2026.
They also clarified that the e-krona isn’t going to be a replacement for the national currency, but would provide a solution to the growing exodus of cash in Swedish society.
According to a McKinsey Global Payments Study, Swedes used cash less frequently last year than people of seven other “mature” markets as a percentage of overall transactions.
What are the main issues pre-implementation?
The head of this project, Mithra Sundberg, says there are many aspects to be investigated and considered before attempting to move forward with the e-krona. What technology will be used, what will the digital currency do specifically, interest rates, these will need to be figured out way ahead of time, according to Sundberg.
What is more, the involvement of lawmakers and the need for a completely new legal framework might push the project even further back, according to the report.
Not all central banks see digital currencies as the solution to a growing cashless society though. Many argue that being a first-mover in an “unexplored” technology such as crypto isn’t wise and it could lead to many issues along the way. The United States would rather be right than first, said Chairman of the Federal Reserve, Jerome Powell recently.
Meanwhile, countries like China and Japan have warmed up to the concept a lot more, with important institutions like the Bank of Japan taking concrete steps into implementing a national digital currency.
If and when implemented, however, the nordic e-krona has the potential to completely transform the western economy in a major way.