Difference between e-kronor, cryptocurrencies and crypto-assets
The digitalisation of society has changed the way we pay. This development has led central banks to consider the possibility of issuing digital central bank money, also known as central bank digital currency (CBDC), such as an e-krona in Sweden and a digital euro in the euro countries.
At the same time, private actors have developed what are known as cryptocurrencies. Cryptocurrencies are also called virtual currencies or digital currencies. The best-known example is Bitcoin. Although Bitcoin and similar instruments were created to act as means of payment, most people have bought them as a speculative asset or store of value. The Riksbank, like other central banks, has therefore taken the view that crypto-asset is a better name than cryptocurrency. There are also crypto-assets that are not created to act as means of payment.
Many crypto-assets use so-called block-chain technology where each transaction is signed and recorded in a ‘ledger’ so that a chain of transactions is formed. Often this is done by a network of computers that all have a copy of the ledger (a ‘distributed ledger’). This makes crypto-assets very difficult or impossible to counterfeit.
"Stable coins" is the name of a group of crypto-assets designed to follow the value of another asset type, for example a national currency such as the US dollar. The issuer will then hold an amount of US dollars in a reserve and issue a proportional amount of stable coins.
The characteristic of a CBDC such as the e-krona is that it would be issued by a state/central bank. An e-krona would be issued by the Riksbank and appear on the Riksbank’s balance sheet in the same way as banknotes and coins. The e-krona would also be expressed in Swedish kronor, and not be a new currency of its own. This means that it would be covered by Riksbank’s legal obligation to strive for an inflation target and thereby stable development in the purchasing power of the krona. There is no state that has these responsibilities with regard to crypto-assets.
Many national supervisory authorities, such as Finansinspektionen (in Swedish) in Sweden, have warned about the risks associated with crypto-assets. In September 2020, the European Commission presented a proposal for a new regulation regarding the trading of crypto-assets, the MiCA regulation (Markets in Crypto-Assets). The Regulation was approved by the European Parliament in April 2023 and applies to the global regulation of cryptocurrency. It is expected to enter into force at the beginning of 2024.
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