How to ensure the future of the Swedish krona

Sweden is currently one of the countries where digital payments are increasing the fastest. At the same time, our legislation and much of our thinking is still tied to paper payments. We at the Riksbank have, since we started out in 1668, contributed to safe and efficient payments. To meet this timeless objective, Sweden has over the years had to rethink on several occasion. Now it is time once again.

The safest money is that issued directly by the state, that is, the Riksbank. If the Swedish people are to be able to pay safely and efficiently in the future, we need a new vision with regard to money. Mine looks like this:

• Everyone shall have access to state money in both physical and digital form, and of course also be able to pay with it.
• It should be safe and easy to make international payments with state money.

State money is needed. Today, cash is the only opportunity for the general public to hold and pay with risk-free state money. If cash ceases to be viable, this opportunity is lost. There is also a risk that people who cannot use digital technology will be excluded. Finally, the country would be very vulnerable if the digital payment systems for some reason ceased functioning, for instance in the event of a crisis. It is therefore important to act now to ensure that it is and will continue to be possible to pay with cash throughout Sweden. It is the Swedish Parliament that has the power to legislate to safeguard the future of cash and this is now an urgent issue.

However, most people will in future probably prefer digital solutions to cash payments. There is a strong trend in this direction, which is visible in the new report on payments that the Riksbank presents this week. This is a clear signal that we Swedes will continue to pay digitally in future.

If the general public is to have the possibility to pay with state money – in the form they prefer – then Sweden needs to also have digital state money, an e-krona. The question of the e-krona is also something the Riksdag must determine. I consider that new legislation should give the e-krona the same status as cash, legal tender. For the e-krona to be viable, it also needs to meet new expectations of a modern means of payment, such as being able to make payments 24 hours a day, every day of the year, and for the payment to be complete within seconds.

The Libra project shows the need for better international payments. We must also think a step further and beyond national boundaries. In the long run, it should be possible to make cheap and instant payments around the clock between different world currencies. Facebook’s Libra initiative shows that there is a need for safe, fast and cheap payments between countries – a need that the world's central banks, including the Riksbank, have failed to meet. Together with our Nordic and Baltic neighbours, we could lead the way and create a digital payment union. If we succeeded in this, we could be a role model for other parts of the world.

So – there is a difference between money and money. The money in your wallet is issued by the state. The money on your card is issued by the commercial banks. The Riksdag therefore needs to modernise the legislation so it fits a digital time with new forms of payment. Meanwhile, the Riksbank is working to ensure that payments within and between countries can be made quickly, safely and cheaply, 24/7. It is time to act to secure the future of the Swedish krona.

Stefan Ingves, Governor of the Riksbank