The governor of Sweden’s central bank has issued a five-year time frame within which he expects the country to have a central bank digital currency (CBDC). This is the first time the regulator has given a tentative timeline as it seeks to introduce a CBDC into one of the world’s most advanced digital payment systems.
Stefan Ingves revealed the timeline to local outlets recently, stating that five years is a reasonable target. As Bloomberg reports, Ingves believes that this speed for the e-krona studies and experimentation is a success for Sweden. “We’ll only know in hindsight whether it was quick or slow,” the governor however acknowledged.
One of the key concerns raised in regards to CBDCs is the amount of control they erode from the central bank. Some have expressed fears that monetary policy tools such as interest rates and quantitative easing would become almost useless when the public is using a CBDC. One of those who have raised such concerns is Anna Breman, the Riksbank deputy governor. In February, she stated her concern that a CBDC in Sweden would make it easier to introduce “helicopter money and deeply negative interest rates.”
However, Ingves isn’t concerned about such possible risks, at least not at present. “That would be a question for the distant future,” he told reporters.
Sweden has one of the most advanced digital payment systems in the world. The country ranks first for having the least transactions involving cash which stands below 2%. 85% of the population has access to online banking, the highest by a mile among its peers. This foundation will make it easier for Riksbank to deploy the CBDC.
Riksbank launched a feasibility study on a digital krona in December 2020, led by Anna Kinberg, former chair of the central bank’s finance committee. The central bank recently completed the first round of trials and identified that the main obstacle encountered during the trials was scalability, as well as issues around privacy.
“The Riksbank is currently analysing to what extent the information stored in the transaction history can be regarded as information covered by banking secrecy and whether it comprises personal data,” according to Riksbank’s report.
As a result, the central bank it is looking at the possibility of continuing to run the trials until 2026.
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