Swedish Bankers Air Concerns Over E-Krona Digital Currency Plan

While the Riksbank appears keen to launch the e-krona, bankers are worried about how the digital currency might affect their industry.

AccessTimeIconJan 5, 2021 at 4:34 p.m. UTC
Updated May 9, 2023 at 3:14 a.m. UTC

Swedish banks have expressed apprehension over the central bank's proposed e-krona digital currency and how it could affect their industry.

With Sweden the nation that uses cash the least globally, the Riksbank has been considering taking digital payments using the e-krona mainstream. Late last year, Sweden’s financial markets minister, Per Bolund, said the Riksbank finance committee had launched a review into the prospects of switching the country to the digital currency, a study that will be completed in November 2022.

  • Fed Sees Just One Rate Cut This Year; CRV Slides as Curve’s Founder Faces Liquidation Risk
    01:49
    Fed Sees Just One Rate Cut This Year; CRV Slides as Curve’s Founder Faces Liquidation Risk
  • What's Next for Bitcoin After Fed Predicts Just One Rate Cut for 2024
    00:50
    What's Next for Bitcoin After Fed Predicts Just One Rate Cut for 2024
  • Litecoin Creator Charlie Lee on Company Evolution
    09:05
    Litecoin Creator Charlie Lee on Company Evolution
  • U.S. CPI Returns Flat in May; Donald Trump Wants All Remaining Bitcoin to Be 'Made in USA'
    01:45
    U.S. CPI Returns Flat in May; Donald Trump Wants All Remaining Bitcoin to Be 'Made in USA'
  • But bankers in the nation say this would fundamentally change how the banking system works, according to a Reuters report Tuesday.

    One concern expressed is that if people move their money out of deposit accounts and to the e-krona, this could leave banks short of funding and leave them to rely on wholesale markets for liquidity, said the report.

    Masih Yazdi, CFO of corporate bank SEB, said this would risk financial stability by making banks take on more debt and possibly become unprofitable.

    How the central bank would manage the money it takes in is another question. Rickard Eriksson, an adviser for the Swedish Bankers Association, asked whether the Riksbank might lend funds to banks to compensate for the lack of deposits or would it merely hold them? The former option might mean mortgages and corporate loans may depend on the central bank's risk appetite.

    “I don’t think the Riksbank has really thought about this or come up with good answers,” he told Reuters.

    Yazdi added that the central bank would be moving beyond monetary policy into areas like privacy. That's because a blockchain-based digital krona would be traceable, unlike cash.

    However, the central bank appears set on the project. Last October, Riksbank Governor Stefan Ingves called for the Swedish government to "review the concept of legal tender" and prepare legislation to make way for the e-krona.

    "There shall be digital state money as legal tender, an e-krona, issued by the Riksbank," Ingves wrote in an economic note at the time.

    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.