The central bank of Sweden has volunteered to host a new digital currency innovation hub from the Bank for International Settlements, in its latest steps towards embracing central bank digital currencies (CBDCs).
The Riksbank, which has been actively engaged in testing its own digital currency, asked to host the event in an announcement on March 6, noting it would still need to make arrangements in place to co-finance the hub.
Since the announcement, the Riksbank proposed an amendment to the Sveriges Riksbank Act, required to give the bank the necessary approval to finance the operations of an international organization.
Under the new powers, the Riksbank hopes to secure funding for a period of five years, expected to cost 30 million Swedish kronas ($3.1 million) per year, should its application to host the hub be successful.
According to the bank, a referral circulated on the amendment raised no objections or won support from the organizations consulted, comprised of various other agencies, organizations and stakeholders.
The move to set up a business hub in Sweden comes as the country moves rapidly towards digital currency and payments. Sweden continues to see a dramatic decline in cash payments nationwide, in preference to digital payment options.
As a result, the Swedish central bank has been paying significant attention to digital currencies, payment and settlement solutions on the blockchain.
The BIS set up its Innovation Hub to encourage global central banks to work more closely together on developing international payment infrastructure and systems. Currently, locations are sited in Switzerland, Hong Kong and Singapore, with Sweden hoping to add to the list.
According to the central bank, being included within the BIS ecosystem is important for the Riksbank, because it “has a comparative advantage in relation to other central banks” in developing central bank digital currencies.
Testing on the ‘e-krona’ digital currency began with a pilot scheme launched back in February, developed in partnership with professional services firm Accenture. At the time, the central bank said the pilot was expected to last for a year.
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.
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