National digital currencies only seem to be a few years away from now. Sweden, a country indicating their desire to go cashless before 2020, is one of the regions where such a currency could be introduced shortly. The country’s central bank is debating whether or not they can add a digital currency to supplement cash.
Will We See A Swedish Digital Currency Soon?
Riksbank, the Swedish central bank, is keen on the idea of using a national digital currency. With cash usage declining in the country, and mobile payments not being embraced as quickly as anticipated, there is room for competing solutions. Digital currency seems to be a perfect candidate, even though this will be nothing like Bitcoin or other cryptocurrencies.
Similarly to nearly every other aspect of everyday life, finance is transitioning into a digital form. This also means cash will eventually be replaced by a digital counterpart, such as a national digital currency. Riksbank is planning to launch a multi-year investigation into the matter, as they intend to issue digital money to private individuals in the future.
Banknotes and coins are being used sparsely in Sweden right now. Instead, card payments are becoming the new norm in Sweden, even though they are subject to high fees for retailers. Digital currency could alleviate these concerns, as transaction costs would be reduced for all parties. Moreover, it would give the central bank even more control over the financial ecosystem in the country.
Assessing the technological requirements is just the first step in a long process, though. Legal and policy implications have to be taken into account as well, which will require extensive research. Once all of those steps have been completed, development of the national digital currency can begin. For now, it remains unclear how this currency is to be issued, and whether or not distributed ledgers will play a role in the process.
But perhaps the biggest concern is how a national digital currency would affect Sweden’s financial stability. Switching to digital cash can comprise smaller bank’s ability to deal with a financial crisis. All of these factors need to be taken into consideration as the research progresses.
Header image courtesy of Shutterstock