Sweden Wants to Test E-Krona Viability for Smart Payments

Trials by Riksbank have shown that offline payments can work using the CBDC, but the central bank is also looking at privacy concerns.

AccessTimeIconApr 6, 2022 at 11:35 a.m. UTC
Updated May 11, 2023 at 5:07 p.m. UTC

The Swedish central bank says it wants to look at how a new e-krona could stimulate "smart payments" that some say are the future of money.

In a report published on Wednesday, the Riksbank deemed tests to integrate state-backed digital money into conventional banking systems a success – but said it was still examining claims of the promised benefits the new technology could bring.

The ability to program or control transfers – such as triggering a payment when a contract is fulfilled, or giving pocket money that can not be spent on sweets – are cited as a potential benefit of central bank digital currency (CBDC), but Swedish officials want to probe that further.

“Concepts such as programmable money, smart money and smart payments are often said to be the future of payments, and this is used as an argument in favor of the new technology,” the central bank said in the report.

Though no decision has yet been taken about the design or issuance of an e-krona, in the next phase, “we want to test and explore how such solutions can be used to create new payment services, and why they would be more effective than more traditional technologies,” the central bank said.

A trial to integrate existing intermediaries such as banks to distribute the CBDCs to regular citizens was deemed “successful” by the report, as were off-line solutions in which the asset can be stored locally on someone’s phone.

Like the European Central Bank (ECB), Sweden, which is in the European Union but does not use the euro currency, is looking at whether to allow those offline payments – which could aid privacy, but also bring the same kinds of risks of cash, like theft, or use of the funds for illicit purposes.

Because the pilot version of the e-krona verifies tokens using a transaction history, more data gets shared among participants than would normally be the case, meaning the idea could fall foul of tough privacy laws, such as the EU’s General Data Protection Regulation (GDPR).

“Consultation with both the Swedish and the European Data Protection Authorities may be necessary to clarify how a solution based on DLT/block chain technology relates to data protection regulations," the report said.

That relates to an ongoing debate on whether crypto-style blockchain technology would aid or hinder user confidentiality.

Blockchain “might ultimately be the only solution left, in terms of being able to embed privacy by design” into a potential new digital euro, Marina Niforos, fffiliate professor at HEC Paris, told CoinDesk. Cryptographic mechanisms are potentially able to ensure that data is only accessed by those who need to see it, she added.

But the Bank for International Settlement’s Hyun Song Shin warned in a webinar on Wednesday that blockchain could also lead to a free-for-all of payment data being made public.

In systems that use people’s real names, “we cannot use blockchains as in cryptocurrencies, because we don't want to post all the transactions in a public way, so that everyone can see what transaction someone has made with whomever," Shin said.


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Jack Schickler is a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.

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