Sweden warns against stablecoins and wants its own digital currency
Sweden is again exploring a digital crown for fear of foreign stablecoins and the digital euro, which could weaken the national currency.
The Swedish central bank wants the country to re-examine a digital crown. According to the Riksbank, foreign stablecoins and the advent of a digital euro could weaken the position of the Swedish currency. The central bank warns that Sweden is in danger of falling behind.
Sweden is one of the countries where cash is used the least. According to research by the Riksbank, only five percent of the Swedes surveyed paid for their last purchase with cash.
The central bank fears that foreign stablecoins, such as digital coins linked to the US dollar, are increasingly being used for payments.
According to Vice-President Per Jansson, the Swedish krona could lose ground as a result. If digital means of payment in foreign currencies are easier to use, consumers and companies can choose to do so.
This could make it more difficult for the Riksbank to influence the economy through interest rate policy and to monitor financial stability. In the short term, the bank sees little danger, but in the longer term that may change.
One possible solution is the e-krona, a digital version of the Swedish krona issued directly by the central bank.
In 2023, a government commission concluded that such a digital currency was not urgently needed. Meanwhile, the Riksbank looks at it differently.
The central bank has not yet decided whether the digital crown should actually be introduced. However, she does want politicians to start the preparations in advance. According to Jansson, it would take at least five years to develop the necessary legislation and infrastructure.
A digital crown can also serve as an alternative means of payment in the event of power outages or problems with the communication network. Payments without an internet connection are possible.
Sweden is also looking at the digital euro. The European Central Bank is working on this digital currency, which may be introduced in 2029 if the necessary legislation is adopted. Sweden could use parts of that infrastructure for its own digital crown.