Sweden's central bank eyeing digital currency

STOCKHOLM • Sweden's central bank is considering issuing a digital currency called e-krona within two years, as cash transactions decline in the the Nordic nation, officials said yesterday.

"Should the Riksbank issue electronic means of payment in the same way as we now issue cash?" Ms Cecilia Skingsley, deputy governor of the bank, said during a speech in Stockholm.

But the world's oldest central bank has not yet decided if it will be the first to supply a digital currency, as legal and technical issues need to be resolved.

"Although it may appear simple at first glance to issue the e-krona, this is something entirely new for a central bank and there is no precedent to follow," Ms Skingsley said.

Sweden is not the only country to consider this move, she noted, citing discussions on the matter this year by the Bank of England and the Bank of Canada. Since last year, Ecuador has allowed its citizens to make small payments by mobile phone in Dinero electronico ("electronic money"), a virtual currency managed directly by the central bank, worth as much as the American dollar, and which mainly targets those without a bank account.

"The low use of cash in Sweden means that this is more of a burning issue for us than for most other central banks," she said. But Ms Skingsley underlined that if the Riksbank decides to issue the e-krona, it would not replace cash but will serve as a complement. "The Riksbank will continue issuing banknotes and coins as long as there is demand for them in society," she said.

According to the central bank, cash withdrawals have fallen by about one-third over the last five years in Sweden, where 97 per cent of the population uses a bank card.

REUTERS

A version of this article appeared in the print edition of The Straits Times on November 17, 2016, with the headline 'Sweden's central bank eyeing digital currency'. Print Edition | Subscribe