Sweden has launched a review into the feasibility of moving to a state-backed digital currency. According to a new report, the review will take two years, with the results expected to dictate the way forward for the European nation.
Per Bolund, the Swedish financial markets minister, revealed that the review will be completed in November 2022. The government picked Anna Kinberg, a former chairwoman of the central bank’s finance committee, to lead the inquiry.
As Bloomberg reports, the Swedish government believes that its digital currency, the e-krona, will make financial services available to everyone. It will also lead to a more efficient financial services market, the Minister stated. However, the migration to a cashless society must not be rushed, as it will have great consequences if there any glitches.
“Depending on how a digital currency is designed and which technologies are used, it can have large consequences for the entire financial system.”
The inquiry comes just two months after the central bank, known as Riksbank, revealed that Sweden’s cash usage is now at record lows. While the Scandinavian nation has always been a leader in cashless payments, the coronavirus pandemic has accelerated the trend. Since the pandemic struck, cash payments have reduced to less than 10%, Riksbank stated.
Sweden’s central bank has been one of the largest proponents of the e-krona. In an October economic note, governor Stefan Ingves described the e-krona as the future, stating that it’s “evolution, not revolution.”
Ingves laid out some of the qualities that make the digital migration essential for Sweden. These include its durability since it can withstand “disruptions to the electricity supply, the digital infrastructure or the banks’ payment systems.” In addition, the e-krona would not erode the Riksbank’s role as the key player in the monetary system; a role which the bank regards highly.
In his note, the central banker outlined the challenge that many, especially in the digital currency industry have pointed to for years:
“In a world where we can send information around the world in real time, it may appear strange that it takes such a long time and is so difficult to move digital money. My opinion is that payments, both those within Sweden and those between countries, should be as quick as exchanging information in the current digital society.”
Should the e-krona review recommend switching to a sovereign digital currency in 2022, Sweden will be playing catch-up to other countries that are moving much faster. China remains the leader in the CBDC field, but many other countries, including in Europe, are making moves.
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