By
Bhushan Akolkar
January 3rd, 2024
Riksbank proposed the use of e-Krona for retail payments under different conditions while evaluating factors such as transparency, privacy, and governance.
Earlier this week, the central bank of Sweden aka Riksbank released a report detailing the third phase of its central bank digital currency (CBDC) research. Swedish Riksbank has proposed a collaborative model for e-Krona retail as well as conditional payments.
Back in 2020, Riksbank started its CBDC research in collaboration with the country’s existing private payment services. Furthermore, Riksbank stressed governance as a key parameter for collaboration.
The central bank divided the available options into three levels. Here, the lowest level was a set of guidelines that risked giving participants freedom in a way that “it may be difficult for the public to form a common understanding of what an e-krona is”. Also, the goal here was not to serve the entire population.
However, on the other side, there would be a Riksbank-operated app where “the interface and range of services for the e-krona would […] be standardised and common for all participants”. The Swedish central bank stated that setting of these parameters could have a high impact on innovation.
In the latest research report, Riksbank stated that they have successfully conducted a trial payment using the CBDC for purchasing a car. Although this was positive for e-Krona’s programmability, there were privacy questions raised as the transaction required some additional information to go through.
“If conditions are placed on money, for example that it can only be used for certain purchases or on certain occasions, it risks becoming something more like a gift card and thus no longer money,” it noted.
Transparency Could Impact Bank Secrecy
Riksbank stated that the transparency inherent within the system could have severe implications for the bank’s secrecy. The Swedish central bank stated that they have not arrived at a concrete decision on the issuance of the CBDC aka e-Krona. It added:
“When cash takes a back seat in favour of digital services from private actors, the Riksbank’s direct role on the payment market is reduced. The Riksbank may thus find it more difficult to fulfil its task of promoting a safe and efficient payment system accessible to all groups in society.”
The central bank said that e-krona is a potential solution to this problem. Apart from its CBDC, Riskbank has been also participating in other projects such as cross-border retail payments and remittances.
The Swedish central bank is working in tandem with other big economies such as the US and Europe on the CBDC project. Recently, ECB chief Christine Lagarde made a controversial statement saying Digital Euro will give them more control over users’ money. This hasn’t gone well with the global crypto community.