Sweden’s central bank in mid-November opened a discussion about whether to introduce a digital currency, called ‘ekrona’, within two years. It would be the first significant central bank in the world to do so.
Cecilia Skingsley, Deputy Governor of Sweden’s central bank Riksbank, explained the move to supplement cash was being considered in response to a dramatic decline in the use of coins and notes among the population.
According to a central bank report at the end of October, cash withdrawals in Sweden have fallen by about a third over the last five years, both in terms of number and value. Additionally, the amount of notes and coins in circulation has fallen by 40% since 2009, with a rise in online shopping and card payments.
The central bank is in the early stages of exploring the idea, and will be launching a project to explore various possibilities, as well as assessing the technological, legal, policy, and financial implications of a digital currency.
While banks are currently given access to electronic money by the central bank, if Sweden does choose to introduce the ‘ekrona’, it would be the first time a major country in the world has given consumers direct access to virtual money issued by a central bank.
Although Sweden may be the first to issue a digital currency, it is not however, the only country actively considering such a move. In June, the UK Home Office told the Treasury that there “might be a number of advantages of any digital currency for the UK being created and owned by a central government”. The Bank of England subsequently published a working paper on the macroeconomics of central-bank-issued digital currencies in July as part of efforts to plot a way forward and embrace blockchain technology.
Sweden was a European leader in introducing bank notes in 1661, responding to the rise of the printing press; yet again, it is considering new technologies, including blockchain, as the basis for its next currency innovation. This underlines The World Economic Forum’s thoughts on blockchain technology, as fundamentally “[altering] the way financial institutions do business around the world”, as well as responding to the trends of hyperconnectivity and an emerging civil society.