The possible impact of the digital euro on Sweden

News, Staff memo Eurosystem central banks are well advanced in their efforts to design a central bank digital currency, known as a digital euro. A digital euro is mainly intended for use within the euro area. However, a legislative proposal from the European Commission opens up the possibility for non-euro countries to allow their citizens and businesses to access digital euro services. In a new Staff Memo, Ann Börestam and Anders Mölgaard Pedersen analyse the potential consequences for Sweden of the introduction of a digital euro.

In the Staff Memo, the authors note that the impact is likely to be limited. Given that the digital euro reaches a certain level of use in Sweden, it could strengthen competition and contribute to increased resilience in the Swedish payment system. The European Commission's proposal also includes a limit for holdings of digital euros, so the impact on bank deposits is expected to be small. Nor is a digital euro expected to have any major impact on the exchange rate or monetary policy in Sweden.

A digital euro could increase the need for an e-krona to safeguard the role of the Swedish krona and may have positive effects on the work on an e-krona. By taking advantage of the technology and regulatory framework being developed for a digital euro, the costs and complexity of the work on an e-krona can be reduced. Together with an e-krona, a digital euro could also improve and simplify cross-border payments.

Authors: Ann Börestam and Anders Mölgaard Pedersen at the Payments Department of the Riksbank.

Staff memo

A Staff Memo provides members of the Riksbank’s staff with the opportunity to publish advanced analyses of relevant issues. It is a publication for civil servants that is free of policy conclusions and individual standpoints on current policy issues. Publication is approved by the appropriate Head of Department. The opinions expressed in Staff Memos are those of the authors and should not be regarded as the Riksbank’s standpoint.

Contact: Press Office, tel. +46 8-7870200
Updated 14/05/2024