Protocols & Policy · Central banks
In a letter dated Oct. 7 and published Oct. 15, Sweden's central bank told parliament's finance committee it should start a public inquiry into the laws a digital krona would need, citing security, the digital euro and stablecoins.
Sweden's central bank has asked parliament to start preparing the laws a digital krona would need, while saying it has not decided whether one should exist. In a letter to the Riksdag's Committee on Finance, dated Oct. 7 and published Oct. 15, the Riksbank said a public inquiry should begin now because building a digital krona would take years (sources 1, 2).
"The Riksbank has not taken a position on whether a digital krona should be issued," the letter says (source 2). Under the Sveriges Riksbank Act, the bank "may, with the consent of the Riksdag, issue a digital means of payment" (source 2). Any launch would be a decision for lawmakers.
The Riksbank published the letter on its website at 6:22 a.m. ET on Oct. 15, describing it as information on "developments in the payments market that bring the issue of a digital krona – previously known as the e-krona – back into focus" (source 1).
The letter starts from Sweden's last look at the question. A government inquiry, the Payments Inquiry, concluded in its report "The State and Payments" that "there were not, at that time, sufficiently strong societal needs for the Riksbank to issue a digital krona" (source 2). The Riksbank now says "there have been significant developments since the report was published, which is why a new assessment may be required in the not-too-distant future" (source 2).
The letter sets out three developments under separate headings: a deteriorating geopolitical situation, work on a new European payment infrastructure, and the emergence of new technology and stablecoins (source 2).
| Development (letter's heading) | What the letter says | Source |
|---|---|---|
| "A deteriorating geopolitical situation" | A digital krona "could boost the resilience of the Swedish payments market," including "enhanced opportunities to make offline payments" | 2 |
| "Work on a new European payment infrastructure is well advanced" | "In the long term, the lack of a comparable solution in Sweden, based on the Swedish currency, could affect the competitiveness of our payment system" | 2 |
| "The emergence of new technology and stablecoins" | "If stablecoins pegged to foreign currencies are considered attractive as a means of payment, the use of the Swedish krona could come under pressure even within Sweden's borders" | 2 |
Security. The letter says "the geopolitical situation has deteriorated significantly in recent years" and that "even in peacetime, the payments system is a target for so-called hybrid threats, such as cyber-attacks" (source 2). A digital krona, it argues, would give households and companies "an additional payment method based on Swedish and European infrastructure" (source 2).
The digital euro. The Riksbank notes that the European Central Bank "has announced that it plans to launch a pilot scheme in the second half of 2027, followed by a public launch in 2029" (source 2). It says "future payment solutions, infrastructure and legislation in the EU will be based on the existence of a digital euro" (source 2).
The stablecoin section is short and hedged. The letter defines stablecoins as "digital assets whose value is pegged 1:1 to one or more underlying assets" and notes that "the majority of stablecoins issued today are pegged to the US dollar" (source 2). It says use has grown "although the market remains small in relation to the global financial system," and that "to date, the main use of stablecoins has been in the trading of cryptoassets, but they could potentially also become more widely used as a means of payment" (source 2).
Then comes the risk, and the limit on it. "If stablecoins pegged to foreign currencies are considered attractive as a means of payment, the use of the Swedish krona could come under pressure even within Sweden's borders. The Riksbank's assessment is that such a scenario does not pose a significant risk, at least not in the near term. In the long run, however, it cannot be ignored" (source 2).
Elsewhere the letter says a better payments system "would strengthen the krona's position and reduce the risk of it losing ground to other digital central bank currencies and new digital assets such as stablecoins" (source 2). It also argues that Sweden "is now beginning to lag behind some other European countries" on instant account-to-account payments, citing Norway, Denmark and the euro area (source 2).
The core request is about time. "The Riksbank estimates that the implementation work for the Riksbank and the market, as described above, would take at least five years. In addition, there is the time it would take to make the legislative amendments required for the introduction of a digital krona," the letter says (source 2).
Legislation would be needed. Citing the Payments Inquiry, the Riksbank says "a whole range of laws need to be amended" and that "a specific law governing a digital krona would probably be required" (source 2). It says it is "justified to begin preparing the necessary legislative framework now, even if Sweden ultimately decides not to launch a digital krona, or to further postpone a launch. Such legislative preparations would be initiated by the appointment of a public inquiry" (source 2).
"If the Riksdag considers that this work should be initiated, the Riksbank stands ready to assist, if needed," the letter says, and it offers to return with draft terms of reference, "preferably once the regulation establishing the digital euro has been finalised" (source 2).
An appendix lists what such an inquiry would examine, including a new Act on digital kronor covering availability and restrictions, distribution, the split of responsibilities with private firms, and offline use, along with privacy, anti-money-laundering and sanctions rules (source 2).
The Riksbank says "it should not be possible to use a digital krona for surveillance," pointing to the digital euro proposal, under which offline payments in shops must be anonymous, and says "a Swedish regulatory framework for a digital krona could be designed in a similar way" (source 2). It also says it "would be advantageous to use the infrastructure that the ECB is planning for the digital euro" if Sweden issued a digital krona (source 2).
The letter is a request to prepare, not a launch plan. Whether an inquiry begins is up to the Riksdag (source 2).
Sources
Holding the Corner.
Not financial advice.