STOCKHOLM, Oct 22 (Reuters) – Sweden’s central bank has revived the debate over whether to introduce an e-krona as war, cyber threats and new digital payment systems raise fresh questions about whether one of the world’s most cashless nations can preserve the role of its currency.
The Riksbank was one of the earliest central banks to explore adopting a so-called retail central bank digital currency, or CBDC, based on blockchain technology as Swedes abandoned cash in favour of cards and digital payments.
A government inquiry in 2023 said there was no urgent need for a CBDC in Sweden, however.
But with the European Central Bank’s plans to launch a digital euro now close to fruition, the Riksbank is urging parliament to look again at the issue.
“Sweden is a very cash-light society, and that matters,” Riksbank Deputy Governor Per Jansson told Reuters on the sidelines of a conference on Thursday.
“If our cash becomes digital and Swedish kronor are not available in a usable digital form, then the krona may not be able to compete with other, more convenient digital payment instruments that can easily be used across borders.”
A Riksbank survey earlier this year showed only 5% of Swedes had used cash for their most recent purchase.
In a letter to legislators this month, the Riksbank also pointed to the development of stablecoins as potentially impacting the krona’s international competitiveness.
If use of the krona shrank, the central bank could face challenges in maintaining the transmission of monetary policy and safeguarding financial stability.
FINANCIAL SYSTEM PART OF DEFENCE STRATEGY
Geopolitics has also highlighted the importance of resilient payment systems as part of Sweden’s total-defence strategy.
“The ability to be able to pay if there is an attack or an electricity blackout or whatever, is extremely important, one of the most vulnerable parts of our society,” Amanda Sundstrom, senior macro strategist at banking group SEB, said.
“So when we’re talking about defence, this should be one of the top things on the list.”
The European Central Bank could launch a digital euro in 2029.
Jansson said the Riksbank had not taken a stance on the e-krona and that it was up to parliament to decide. However, it would take five years at least to introduce the necessary legislation and make other preparations, he said.
“If Sweden wants to have a digital krona and avoid falling too far behind, then it’s a good idea to begin this work now,” Jansson said.
(Reporting by Simon Johnson; Editing by Hugh Lawson)
