Swedens Central Bank, Riksbank, recognizes the rapidly shifting financial landscape. They are looking into ways whereby Sweden can become a truly cashless society.
There are already several banks in Sweden which no longer handle cash and Riksbank believes that a state-backed e-currency is necessary to maintain the stability of the countries financial system.
The e-Krona as it has been dubbed will initially be something to use in addition to cash. The intentions are that it eventually becomes the primary form of currency within Sweden. Sweden is concerned that if the move to digital cash is left down to private banking entities that they will have too much responsibility which could lead to problems in the event of a crisis situation.
In their report on e-krona the bank writes:
There are currently groups in society that are encountering problems as cash use declines because they find it difficult to use digital payment solutions for one reason or another. Such groups include older people, people with disabilities or those who, for different reasons, do not have access to payment instruments other than cash. Since it cannot be expected that the private market fully cater for these groups, the state can choose to take greater responsibility for them.
Riksbank suggests that by 2019 there should be a pilot program in place and it should be fully implemented by 2021. Although they are investigating the potential of using distributed ledger technology this will not be a cryptocurrency in the conventional sense. It will instead be a digital form of fiat currency that is administered and regulated by the state.
In its report, the bank is considering other options simultaneously with the issuance of the e-Krona, including “subsidizing” cash usage.
“To facilitate and increase cash usage, the Riksbank could choose to subsidise cash, either directly or indirectly, For example, we could fully or partly return to the 1980s structure of Riksbank branches across the entire country and the comprehensive service to banks and other market participants that waws previously provided to the banks largely for free,” the report added. “This would reduce the banks’ costs for cash, allowing them to provide a greater range of cash services. Ultimately, this could make it easier and more attractive for private individuals, retailers and other actors to handle cash. […] However, as a matter of principle, the Riksbank’s opinion is that all means of payment should carry their own costs and various charges should be based on actual costs.”
If Sweden proceeds with this proposal it will be one of the first country to implement a fully fledged digital currency although Venesuela has also issued its contorversial Petro coin. Other nations are likely to follow suit as the utility case for digital currencies is greater than that of physical cash.