Sweden's central bank revives e-krona debate amid stablecoin and digital euro concerns

Riksbank urges review as payment habits shift

Sweden's central bank is calling for lawmakers to reconsider issuing an e-krona, a digital form of central bank money (money issued directly by the central bank, not by a private bank). The push comes as foreign-currency stablecoins (digital currencies designed to hold a stable value, often tied to another currency like the US dollar) and a planned digital euro (a digital form of the euro under consideration by the European Central Bank) could affect the role of the Swedish krona in payments.

A 2023 government inquiry had found too little need for an e-krona. The Riksbank says changes in how people pay and growing security risks may warrant a new review.

Key concerns raised

• Competition across borders: The Riksbank has warned that if cash becomes digital and Swedish kronor are not available in a usable digital form, the krona may not be able to compete with other convenient digital payment instruments that can be used across borders.


• Foreign stablecoins: In a recent letter, the central bank warned that stablecoins tied to foreign currencies could reduce demand for the krona. It sees little near-term risk, but says the long-term threat remains.


• Falling cash use: Just 5% of Swedes surveyed used cash for their last purchase, according to Riksbank data cited in the report. A shift away from the krona could make it harder for the bank to steer the economy and protect financial stability.


• Backup function: The Riksbank sees an e-krona as a potential backup payment option during power or telecom outages, with offline payments among its possible features.

What the Riksbank is asking for now

The Riksbank has not taken a position on issuing an e-krona, but it wants lawmakers to start preparing legislation now. The work would take at least five years. No lawmaker approval has been reported in the supplied material.

Links to the digital euro

Sweden could draw on the digital euro's infrastructure to build the system. The digital euro could potentially debut in 2029 if EU lawmakers approve the required rules.

What is confirmed

• The Riksbank is calling for lawmakers to reconsider an e-krona.


• It cites foreign-currency stablecoins and a planned digital euro as reasons for the review.


• A 2023 inquiry previously found too little need for one.


• Legislation preparation would take at least five years, and lawmakers have yet to approve an e-krona.


• Cash use is low in Sweden (5% of surveyed people used cash for their last purchase).

What is still unclear

• Decision to issue: The Riksbank has not taken a position on actually issuing an e-krona.


• Timing and approval: Any launch remains dependent on future legislation, with at least five years of work if started. No timeline for a decision is stated in the supplied material.


• Scale of threat: The central bank sees little near-term risk from foreign stablecoins, but a long-term threat remains. The exact impact on krona demand cannot be confirmed from the supplied material.

Sources

• CoinDesk


• Reuters


• Riksbank letter


• European Central Bank - digital euro progress