The world's oldest central bank, Sweden's Riksbank, is to extend its pilot project for a potential central bank digital currency (CBDC) for another 12 months.
According to a press release on Friday, the project, which is being carried out with assistance from professional services firm Accenture, will run until February 2022.
The Riksbank said it would continue developing a technical solution for a central bank-issued e-krona "as a complement to cash," with the primary objective being for the bank to increase its knowledge around the technology.
For 2021, the institution will continue developing its potential digital currency offering with a focus on performance and scalability. Testing offline functions and bringing external participants into the test environment is also on the table.
The project has raised some concerns from Sweden's commercial banking sector over the viability of a sovereign CBDC and how that would impact the entire banking system.
There is no final decision over the issuance of the e-krona despite strong lobbying from the central bank to government last year. But with traditional cash seeing falling use, even more so during the coronavirus pandemic, Sweden has been mulling a switch to the CBDC.
However, questions still remain over the digital currency's ultimate design and underlying technology, according to Friday's release.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.