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(May 20, 2021) On April 6, 2021, the Swedish Central Bank (Riksbanken) published a report on its e-currency pilot, which is part of its digital currency e-krona project. The e-krona project was launched in 2017 and is scheduled to start preparations for a public procurement process in 2021.
According to the Riksbank, the pilot uses distributed ledger technology (blockchain technology) to support the e-krona, and the Riksbank manages it together with the technological solutions company Accenture, claiming that the issuance and operation of e-kronor will be less energy-consuming than Bitcoin.
As part of the first phase of the pilot, the Riksbank evaluated what laws may apply to an official digital currency issued by the Swedish Central Bank, noting that the law on electronic money would likely not apply because the issuance of the e-krona would be part of the Riksbank’s public authority activity.
In addition, the Riksbank analyzed the technical solution of the e-krona in relation to the money laundering regulations that are currently in place—specifically, the Act on Measures against Money Laundering and Financing of Terrorism (Lag om åtgärder mot penningtvätt och finansiering av terrorism (SFS 2017:630)) and the Act on Punishment for Money Laundering Crimes (Lag om straff för penningtvättsbrott (SFS 2014:307))—to determine whether the e-krona would run afoul of any of these rules. It noted that the laws on money laundering would apply to the e-krona, and that the “responsibility [will] lie with the participants in the network who have the role of distributors and offer the possibility of holding e-kronor and executing transactions on behalf of the end-users.” The report also held that, although it is feasible that an anonymous e-krona may be technologically possible to create, to comply with Swedish law the use of such anonymous currencies must be limited.
During phase 2 of the pilot, the Riksbank will expand the project’s scope to “include potential distributors of the e-krona as participants in the network in order to test how an integration with their internal systems could function with the e-krona network.” In addition, the Riksbank will investigate retail payments and the potential of offline payments using the e-krona, as well as alternative ways of storing the e-krona.
In accordance with chapter 9, section 1 of the Swedish Constitution (Regeringsformen (SFS 1974:152)), the Riksbank holds a monopoly on issuing legally valid coins and notes in Sweden. In addition, the Riksbank is tasked with guaranteeing the robustness of Swedish monetary system. (1 kap. 2 § Lag om Sveriges riksbank (SFS 1988:1385).)
According to the Riksbank, one of the purposes of issuing an official e-krona is to create a public alternative to future commercial currencies by Big Tech, and to ensure that “trust in the monetary system is maintained.” In particular, e-krona would be a digital currency that could be issued only by the Riksbank and, like bills and coins issued by the Riksbank, guaranteed by the state.
The Swedish government has also tasked a group led by special investigator (särskild utredare) Anna Kinnberg Batra with investigating the future role of the national state, including the Central Bank, in the Swedish payment market, and what role an official e-currency could play. (Dir 2020:133 Statens roll på betalningsmarknaden.) Specifically, among other things, the group is to
- map out what the payment market looks like and how it is regulated;
- assess what the future payment market will look like on the basis of developments in Sweden and in other countries;
- analyze and describe the consequences for Sweden of the emergence of payment systems that are completely or partially different from government- or supranational-issued currencies;
- analyze and map security and integrity aspects of both private and government digital-payment systems; and
- analyze and assess the payment market’s ability to maintain socially important activities during peacetime, crises, and times of heightened military readiness, particularly during war. (Dir 2020:133 Statens roll på betalningsmarknaden at 4.)
In addition, the group is tasked with investigating what role legal tender will play in the future and whether any legislative changes need to be adopted regarding money (currently, coins and bills) issued by the Swedish Central Bank.
The report is due to be presented to the government by November 30, 2022.