Technological advances and digitalisation of payments have brought to a head the question of the future role of the state in the payment market. If nothing is done, this development will very likely lead to the general public no longer having access to state-issued money, Riksbank money. This development has also resulted in those groups in society who are unable to use digital services for various reasons finding it increasingly difficult to make payments.
The Riksbank thus needs to consider whether cash needs to be modernised to fit into the digital economy. As part of this, the Riksbank started a project in the spring of 2017 to examine the scope for the Riksbank to issue a central bank digital currency, known as the e-krona. There is currently no formal decision on issuing an e-krona, how an e-krona might be designed or what technology might be used. The main aim of the project is for the Riksbank to increase its knowledge of what would be required to realise the idea of a central bank-issued digital krona.
An e-krona would give the general public access to a digital complement to cash, where the state would guarantee the value of the money. At present, only the banks and other participants in the Riksbank’s payment system RIX have access to the Riksbank’s digital currency. All other digital money in society is issued by the commercial banks.
By definition, an e-krona would be a digital form of payment and could be designed with the aim of including all groups in society. Easily accessible, simple and user-friendly versions could be developed for those who currently have difficulty with digital technology. In addition, an e-krona could form its own separate system and thereby strengthen the resilience of the payment system. In the event of serious shocks to the systems of the banks or card companies, an e-krona could be an alternative form of payment. An e-krona would thus fulfil the same task that cash has fulfilled so far – providing a state payment alternative that is available to all and that complements the supply of payment services from the private sector.
In the e-krona project, the Riksbank has held a dialogue with several national and international agents to hear their views on an e-krona, has looked at proposals for suitable technology and has examined the legal issues that need to be dealt with to ensure the Riksbank has a clear mandate to issue a future e-krona.
Continued dialogue with the general public, payment market participants and other central agencies will be important. No formal decisions have been taken to issue or not to issue an e-krona, but by continuing to examine the possibilities, the Riksbank is preparing a possible way forward to meet a new digital payment market. As the so-called E-Money Directive makes clear, the Riksbank should, under certain conditions, also be able to issue e-money without the approval of the Riksdag. However, considering that cash continues to be marginalised, it is also important for an inquiry to be held on a national level. Consequently, in May 2019, the Riksbank submitted a petition to the Riksdag on the need for an inquiry into the state’s role on the payment market. The Riksdag agreed with the Riksbank and therefore, in the summer of 2019, called on the Government to appoint an inquiry into this. The Government has informed the Riksdag that it intends to decide on terms of reference for a committee in 2020.