Ingves: The e-krona and the payments of the future

“It is important to update the money the Riksbank issues to a format that suits the modern economy. We will therefore develop a pilot version of a central bank digital currency – an e-krona. Once we have tested the pilot version we can choose to issue, or not to issue, a digital krona to the general public.” These comments were made by Stefan Ingves today in his speech at the conference DI Framtidens betalningar in Stockholm.

Date: 06/11/2018 16:15

Speaker: Governor Stefan Ingves

Place: Di Framtidens betalningar, Stockholm

An e-krona would mean that the functions of cash would remain, even in a digital future. On the other hand, if the Riksbank does not offer a new, modern, viable alternative, this means that we will be giving up a tradition and functionality that has worked well for 350 years. Over the years, it has been the state's role to standardise and guarantee all money in society. The basic condition for the e-krona is that it, like cash, will be broadly available to all members of society. It must work with the existing systems and be exchangeable one for one for cash or money in private bank accounts, continued Mr Ingves.

The pilot version of the e-krona will be simple

We therefore wish to develop, build and test a concrete proposal for a viable e-krona. This will be a pilot version of the simpler, value-based version of the e-krona, which entails digital units of value that can be stored centrally or locally. It will not be interest-bearing, but will be fairly similar to cash. We also think there should be the possibility to make payments off-line. By beginning development work, the Riksbank will increase its preparedness to maintain the central bank's traditional role in a future digitalised payment market.

The rapid changes in the payment market mean that rapid real time payments will be important in the future. "My opinion is that payment ought to be made as quickly as we exchange information in the current digital society. It should be possible to make payments instantly 24 hours a day and to settle them in Riksbank money," said Mr Ingves.

The e-krona makes the payment system more stable and inclusive

Sweden may need several alternative means of payment that can function in crisis situations. The more different systems and alternatives that are available, the less vulnerable we will be. An e-krona system would be a parallel, independent system to the card systems offered by the private sector, which reduces vulnerability in relation to having only one system.

The e-krona could also entail an opportunity for all groups in society to continue to make payments without any problems. "The e-krona must be designed with consideration for the fact that there are certain groups who risk financial exclusion when cash disappears, as for various reasons, they find it difficult to use digital solutions," observed Mr Ingves.

Updated 06/11/2018