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Swedish e-krona to fight off cryptocurrencies

Sweden is one of the most cash free countries in the world with card payments and other forms of digital payments dominating also small payments. More and more shops announce they are “cash free”. The Swedish central bank – Riksbanken – has now announced it will invite commercial banks to test a proposed digital currency – the e-krona. The test is expected to be the first wider central bank supported test in Europe.

The e-krona has so far only been used in tests with the central bank and the wider tests are expected to be within a year. The idea is to test it together with commercial banks using the e-krona for commercial and retail payments.

“The technology provides new possibilities”, Riksbanken said in a statement adding that the digital currency is untried when it comes to processing retail payments in the magnitude and with the safety level required.

Many central banks see central bank digital currencies (CBDCs) as a means of maintaining a central role in the payment system, especially with more and more cryptocurrencies available.

The Riksbank said its pilot e-krona is based on a blockchain technology called Distributed Ledger Technology, but that no final decision had been made as to the final form a Swedish CBDC would take.

The bank says one important question is if the e-krona will work also without internet connection. How, and if, an offline e-krona is possible has so far not been tested.

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