Riksbank, the central bank of Sweden, announced the pilot launch of e-krona on Thursday, aiming to explore the possibilities of issuing a central bank digital currency (CBDC).
The central bank, however, made it clear that the pilot project is only for the learning experience as it has not yet decided to embrace the concept of CBDC.
The monetary regulator also cited the Swedish society’s inclination to move away from fiat towards a cashless system behind its motive to explore the area of digital currency.
Challenging the private monopoly on digital currencies
“The main reason that an e-krona has become so relevant is the sharp decrease in cash usage seen over the last decade,” Riksbank stated. “There is no digital state money available to the general public, however, and the digital money and payment methods that are available are provided by private market players. The digital money is, therefore, a claim on a private player in contrast to cash which is a claim on the state.”
The announcement explained that e-krona would only be a digital version of the country’s fiat, reducing the risk of the krona’s position being weakened by competing for private currency alternatives.
The central bank has chosen IT giant Accenture to provide the underlying technology for issuing the digital currency. The firm has received the contract until February 2021, with the option to extend it further.
The pilot currency will be issued on R3’s Corda blockchain.
However, Riksbank clarified that its partnership with Accenture is only for the pilot project, and it will seek a new technology supplier if it decided to move forward with the project.
“In the test environment, the test user shall be able to hold e-krona in a digital wallet,” the regulator elaborated. “From this digital wallet, it will be possible via a mobile app to make deposits and transfers as well as make and receive payments. The user shall also be able to make payments via wearables, such as smart watches, and cards.”