Riksbank, central bank of Sweden: the implementation of digital krona would take at least five years
The Riksbank has submitted an official communication to the Committee on Finance containing information on developments in the payments market that bring the issue of a digital krona – previously known as the e-krona – back into focus. Key points of the communication can be found below.
One of the conclusions in the Payments Inquiry’s report, The State and Payments, was that there were not, at that time, sufficiently strong societal needs for the Riksbank to issue a digital krona, also known as an e-krona. At the same time, the report emphasised that the development of the payment market is rapid and that economic, political and technological changes could lead to a reassessment in the future. As described below, there have been significant developments since the report was published, which is why a new assessment may be required in the not-too-distant future.
. A digital krona could boost the resilience of the Swedish payments market. It would give households and companies access to an additional payment method based on Swedish and European infrastructure and offer enhanced opportunities to make offline payments in the event of disruptions to the electricity grid and telecommunications networks, thereby enhancing the resilience of the payments system as a whole.
. The fact that the digital euro is being rolled out also has an impact on Sweden and the Swedish payment infrastructure. Future payment solutions, infrastructure and legislation in the EU will be based on the existence of a digital euro. In the long term, the lack of a comparable solution in Sweden, based on the Swedish currency, could affect the competitiveness of our payment system.
. To date, the main use of stablecoins has been in the trading of cryptoassets, but they could potentially also become more widely used as a means of payment. If stablecoins pegged to foreign currencies are considered attractive as a means of payment, the use of the Swedish krona could come under pressure even within Sweden’s borders. The Riksbank’s assessment is that such a scenario does not pose a significant risk, at least not in the near term. In the long run, however, it cannot be ignored.
. There are signs that the Swedish payments market is now beginning to lag behind some other European countries in terms of innovation. Wider-ranging solutions for instant accountto-account payments, both domestically and across borders, are one such example. In Norway and Denmark, for example, almost all banks offer their customers instant payments via mobile or online banking. In the euro area, banks are now obliged to offer instant account to account payments via, for example, online banking, if they offer regular credit transfers there. A digital krona would give the public more opportunities to make instant payments and, under certain conditions, could open up new possibilities for cross-border payments.
. It should not be possible to use a digital krona for surveillance – In its proposal for a regulation establishing the digital euro, the Commission has stipulated that it will not be possible to control how the digital euro is used. For payments that are not made offline, the ECB will not be able to identify who is sending or receiving payments; only the banks involved in a specific transaction will be able to do so. So there is no change compared with how things work at present.
. If Sweden were to issue a digital krona, it would be advantageous to use the infrastructure that the ECB is planning for the digital euro. This would provide a reasonable way of gaining access to a resilient infrastructure12 and could potentially enable Swedes to make faster and cheaper cross-border payments throughout Europe.
. The Riksbank estimates that the implementation work for the Riksbank and the market, would take at least five years. In addition, there is the time it would take to make the legislative amendments required for the introduction of a digital krona. Given such long lead times, the Riksbank believes it is justified to begin preparing the necessary legislative framework now, even if Sweden ultimately decides not to launch a
digital krona, or to further postpone a launch. Such legislative preparations would be initiated by the appointment of a public inquiry.
More details: Letter to the Committee on Finance – information on developments that bring the issue of a digital krona to the fore
