The central bank of Sweden (Riksbank) has been testing it’s own digital currency, e-krona recently. One e-krona would be worth as much as a physical 1-krona coin or one krona in a private bank account. But it is not backed up by physical money you put into your bank account.
In 2022, the Riksbank will continue its work on:
- Investigating the need for and effects of an e-krona on the Swedish economy.
- Testing the technical solution for the e-krona within the e-krona pilot.
- Investigating whether and if so how an e-krona would affect Swedish legislation and the Riksbank’s task.
- Comparing different technical solutions and a models for an e-krona.
- Preparing for a possible procurement of an issuable e-krona
The ability to program or control transfers — such as triggering a payment when a contract is fulfilled, or giving pocket money that can not be spent on sweets — are cited as a potential benefit of central bank digital currency (CBDC), but Swedish officials want to probe that further. “Concepts such as programmable money, smart money and smart payments are often said to be the future of payments, and this is used as an argument in favor of the new technology,” the central bank said in the report. Though no decision has yet been taken about the design or issuance of an e-krona, in the next phase, “we want to test and explore how such solutions can be used to create new payment services, and why they would be more effective than more traditional technologies,” the central bank said. A trial to integrate existing intermediaries such as banks to distribute the CBDCs to regular citizens was deemed “successful” by the report, as were off-line solutions in which the asset can be stored locally on someone’s phone.
The officials though are unsure how to proceed with the e-krona. Blockchain “might ultimately be the only solution left, in terms of being able to embed privacy by design” into a potential new digital euro, Marina Niforos, affiliate professor at HEC Paris, told CoinDesk. Cryptographic mechanisms are potentially able to ensure that data is only accessed by those who need to see it, she added. But the Bank for International Settlement’s Hyun Song Shin warned in a webinar on Wednesday that blockchain could also lead to a free-for-all of payment data being made public. In systems that use people’s real names, “we cannot use blockchains as in cryptocurrencies, because we don’t want to post all the transactions in a public way, so that everyone can see what transaction someone has made with whomever,” Shin said.