Sweden’s central bank will work with commercial lender Handelsbanken to test how the country’s proposed digital currency – the e-krona – could handle payments in the real world, the Riksbank said on Friday.
Central banks around the world are looking at launching digital currencies (CBDCs) in response to rapid developments in technology and financial infrastructure, such as the rise cryptocurrencies, falling cash use and the need for instant cross-border payments.
“The e-krona pilot is therefore moving on from only having simulated participants to cooperation with external participants in the test environment,” the Riksbank said in a statement.
In April, the Riksbank said it would seek to include commercial banks in its next phase of testing which would evaluate how the e-krona could be used for both large commercial and small retail payments.
“For Handelsbanken, the project means the opportunity to participate in what may be among the first digital central bank-issued money in the world to be available to the public,” Handelsbanken said in a statement.
So far, most central banks have only got as far as researching CBDCs. Only the Bahamas has launched one, and Sweden and China are the only other nations to have begun testing.
A survey in January by the Bank for International Settlements said central banks representing one-fifth of the world’s population are likely to issue their own digital currencies in the next three years.
Photo: A Handelsbanken branch in Stockholm, Sweden. EPA-EFE/MAURITZ ANTIN