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Sweden does not yet need a central bank digital currency (CBDC) according to a government-appointed investigation. After more than two years' work, the Payments Investigation presented over 900 pages of analysis to the government. The inquiry, led by Anna Kinberg Batra, concluded the case for a Swedish CBDC or e-krona is not yet strong enough. It recommended Sveriges Riksbank continue to study CBDC and return to Sweden's parliament in 2024 with new proposals, if warranted. https://betalningsutredningen.se/wp-content/uploads/2023/03/prm-betalningsutredningen-final-31-mars-2023.pdf

"Libra may become an alternative for certain cross-border payments, but will probably not be used for payments in Sweden to any great extent. These are some of the conclusions drawn in a recent Riksbank Economic Commentary."

One of the last bastions of cash, kids' pocket money, is dying out in Sweden. Only 16% of Swedish children get regular allowances in the form of actual bank notes and coins. Svenska Handelsbanken AB, Sweden's biggest lender, has introduced a digital piggy bank to help kids manage their pocket money via their mobile phones. Sweden's next generation may not even know what a real piggy bank is, consigning the once-ubiquitous savings vessel popularized by storyteller Hans Christian Andersen to the history books, alongside rotary phones and floppy disks.

Sweden's government launched an inquiry that will explore the feasibility of the Riksbank issuing an e-kronor central bank digital currency, and review the meaning of the concept of legal tender. More broadly, the inquiry's assignment includes mapping what the payment market looks like and may look like in the future, based on developments in Sweden and in other countries. In that regard, it will map the division of roles between the state and the business community in the payment market and take a position on the state's future role. The inquiry is expected to be completed by the end of November in 2022. https://www.regeringen.se/pressmeddelanden/2020/12/anna-kinberg-batra-ska-utreda-statens-roll-pa-betalningsmarknaden

"We find that Canada and Sweden show a similar long-term downward trend in small-denomination bank notes relative to GDP, reflecting declining cash use for transactions in both countries. These outcomes have been driven by the adoption of similar retail payment innovations in the two countries. "

The European Central Bank, the Eurosystem and Sveriges Riksbank concluded a cooperation agreement offering Sweden access to the Eurosystem's TARGET Instant Payment Settlement (TIPS) to support the Swedish instant payment service, called RIX-INST. Based on this agreement, electronic payments made in Swedish krona can be settled on the settlement platform for instant payments operated by the Eurosystem.

The Bank for International Settlements (BIS) and the central banks of Israel, Norway and Sweden are launching Project Icebreaker, a joint exploration of how central bank digital currencies (CBDCs) can be used for international retail and remittance payments. using a hub-and-spoke model. The project will run through the end of the year, with a final report expected in the first quarter of 2023.

Central banks of Israel, Norway and Sweden team up with the BIS to explore retail CBDC for international payments

According to a Swedish government-appointed investigation "too many people are stuck outside the digital system" and suggested pressuring banks in Sweden to offer so-called "low-risk accounts" with limited functions (such as, for example, limits on international payments). It also calls on the government to to develop and run its own digital ID system, or to put out a tender for one which would be run by a private provider, to replace the private bank-run BankID system that excludes foreigners, such as refugees, foreign students, and people working on short-term contracts, making it impossible for them to identify themselves and use digital payment systems.

Sveriges Riksbank published a paper that assesses the impact of a European Commission legislative proposal to open up the possibility for non-euro countries to allow their citizens and businesses to access digital euro services. It concludes that the impact will be minimal, but 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.

While Sweden is trialling inserting microchips into its citizens as a new way to pay, China is opting for a less invasive method - your face.

According to the IMF paper, several central banks in different countries are considering implementing some form of CBDC. Uruguay has reportedly launched a pilot program already, while the Bahamas, China, Eastern Caribbean Currency Union, Sweden and Ukraine are on the verge of testing their systems.

Central banks worldwide are examining the possibility of issuing a central bank digital currency (CBDC), with some already testing theirs for different uses. Countries that have advanced their digital currency projects include China, Singapore, Canada, the Bahamas, Thailand, Uruguay, and Sweden. India has also included the digital rupee in the country's draft cryptocurrency bill.

"Australia, Canada, Germany and Sweden are close to abandoning cash payments and potentially accepting cryptocurrencies as a payment method."

Sveriges Riksbank Deputy Governor Cecilia Skingsley confirmed during a CfC St. Moritz conference panel that the central bank is investigating Corda's distributed ledger technology for its central bank digital currency (CBDC) proof-of-concept.

Digitalisation makes payments easier, but also creates risks that need to be managed. The Riksbank therefore needs to keep up with developments and modernise both the central bank money and the Riksbank's systems.

During a recent panel discussion, Stefan Ingves, the Governor of Sweden's central bank, Sveriges Riksbank, laid out a six-step plan for the introduction of is central bank digital currency.

CBDC are currently being investigated by several central banks, with China and Sweden having undertaken trials. Major uncertainties remain about how full-scale CBDC would operate and about their implications for capital markets. Further, there are important concerns about potential threats to individuals' privacy. But, as this Deutsche Bank report points out, CBDC may soon become part of our lives, so societies need to learn how to use them best.

A new BIS paper sets out a database of central bank digital currency (CBDC) technical approaches and policy stances on issuance. Most projects are found in digitised economies with a high capacity for innovation. Work on retail CBDCs is more advanced where the informal economy is larger. More and more central banks are considering retail CBDC architectures in which the CBDC is a direct cash-like claim on the central bank, but where the private sector handles all customer-facing activity. It concludes with an in-depth description of three distinct CBDC approaches by the central banks of China, Sweden and Canada.