Try to pay for something with cash in Sweden these days and you will probably earn yourself a strange look. Almost the entire population uses a mobile payment called Swish, to the point where retailers might stop accepting cash altogether by 2023.
Is this a good thing? Well, for convenience, of course, but there are also concerns. Sweden's central bankers fear that if payment infrastructure is left to the private sector to deal with alone, certain groups might be excluded altogether. Also, faith in the monetary system might be undermined if people can no longer convert what is in their bank account to a 'cash' form backed by the government.
This is why Riksbank, Sweden's central bank, is launching a year-long pilot project of the 'e-krona'. The idea is to create a digital payment system that is user friendly and accessible to everyone. This currency will use the distributed ledger technology inspired by blockchains that run cryptocurrencies. The pilot will test if a state-backed digital currency can play a similar role to the physical one cash plays today. This way, instead of private companies in effect running currency and doing so purely with the motivation of making a profit, a central bank would have the public good as its main focus.
The pilot will run until the end of February 2021, with no obligation on the public to use the e-krona. It will be interesting to see how the Swedish people react, to know how such digital currency might eventually be accepted elsewhere.
