Sweden’s central bank, the Riksbank, is looking at launching a national cryptocurrency called the e-Krona in as few as two years.
Sweden’s position as potentially the world’s first cashless society has lead to a research note, written by HSBC economist James Pomeroy, entitled “Sweden’s big year: Can the economy overcome some challenges?” to identify the country as looking for international cooperation in developing an officially-sanctioned cryptocurrency. The note reads:
“The so-called e-Krona will have to be able to be used for small purchases, as a claim on the Riksbank and be accessible by companies, individuals and financial institutions at all times”.
Sweden’s Riksbank has very much been at the forefront of monetary advances over the years, as their governor Stefan Ingves is eager to point out:
“It was in Stockholm that the first modern banknote was created more than 350 years ago, and that it is here, in Sweden, that cash is currently taking its last breaths. Perhaps the Riksbank will be writing history again”.
HOW THE E-KRONA MIGHT BE MANAGED
It is speculated that the e-Krona would work by either having it work like cash currently does, with value stored on an app or card rather than a central database, or it could be in a registry-based system with the e-Krona stored in accounts held in a centralized database.
“This is more complex, but may make the framework easier to expand and develop over time, and would likely require the use of blockchain technology”.
The system would be fraught with interesting technicalities and nuance for fans of cryptocurrency. A key element of what cryptocurrency offers is protection against scrutiny that cash payments currently afford, giving consumers security in the knowledge that their very private information is not being gathered and sold by third parties in order to profile them as customers or as a potential customer/product for others.
MODERN DAY PRIVACY CONCERN
It’s an issue that cashless societies are now facing, where every transaction can be tracked in minute detail and painting very revealing pictures of your personal life. This is where cryptocurrencies, such as Bitcoin, shine. Cryptocurrencies can provide the same level of day-to-day anonymity that cash provides in an age where societies are essentially cashless. HSBC economist James Pomeroy notes that the Riksbank has:
“…issued a number of research articles on the topic, with the suggestion being that as cash usage continues to dwindle, the central bank may need to find another way to provide their populations with access to payments that are not via an intermediary such as a retail bank”.
A reassuring element appears to be that banks realize that centralized intermediaries may not be in the best interests of their customers or their data security concerns. They also realize that their future as a whole is threatened unless they adapt and keep apace with rapid Fintech developments in the world of finance.