Swedish central bank publishes digital currency ‘economic review’

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The central bank of Sweden has published an ‘economic review’ of the case for central bank digital currencies (CBDCs), in its most comprehensive public work on the topic to date.

The Riksbank published the 98-page document discussing its own plans for an e-krona, a central bank issued fiat token. In the preamble to the report, the bank acknowledged its theme would focus specifically on CBDCs.

The second issue of Sveriges Riksbank Economic Review in 2020 has a special theme, namely central bank digital currencies (CBDC) and the e-krona.

The review is the latest step in the process of developing the CBDC in Sweden. Back in December 2019, authorities announced they had embarked on a pilot scheme to test the feasibility of an e-krona, in partnership with Accenture.

The report references the bank’s earlier work towards a CBDC, as well as detailing its current progress: “Riksbank has since continued to delve into various aspects of CBDC, both from an analytical and a practical perspective…Some of this work is summarized in this issue.”

Reflecting on the challenges and opportunities posed by a central bank digital currency, the report notes there may be difficulties for the bank, particularly in relation to fraud, cybercrime and money laundering.

“An open DLT network is associated to several disadvantages; every transaction must be verified by every participant (cf. blockchain) in a time and resource consuming manner. The responsibility for the Riksbank regarding AML, KYC & CTF could be indefinite. Fraud and cyber-attacks are hard to prevent in an open network,” it stated.

Nevertheless the work is the latest step towards an official CBDC launch. The review comes at a time of increasing interest in CBDCs from central banks worldwide, with a number of global central banks known to be in various stages of development of their own CBDC projects.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.