Sweden’s reserve bank will reportedly be working cooperatively with commercial lender Handelsbanken in order to test out how the nation’s proposed digital currency, the e-krona, may handle payments in the real world, the Riksbank revealed on Friday (May 28, 2021).
Reserve banks across the globe have been considering or have already launched their central bank digital currencies (CBDCs) as a response to ongoing developments in technology and financial infrastructure, like decentralized cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH). CBDCs have also been introduced to address consumer behavior changes such as declining cash usage and the need for conducting instant cross-border transactions.
Riksbank stated that the e-krona pilot “is therefore moving on from only having simulated participants to cooperation with external participants in the test environment.”
Last month, the Riksbank had noted that it would be seeking to include commercial banks in Sweden in its next stage of testing which may assess how the e-krona might get used for settling large commercial and small retail transactions
As reported by Reuters, Handelsbanken’s management noted:
“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.”
So far, the vast majority of reserve banks have only been researching CBDCs and are looking into whether it would be feasible to issue a digital version of their national currency. Only the Bahamas has actually introduced an official CBDC, meanwhile, Sweden and China are the only other countries that have launched large pilot programs in their respective jurisdictions.
A survey released in January 2021 by the Bank for International Settlements (BIS) revealed that reserve banks representing one-fifth or 20% of the global population are quite likely to provide their own virtual currencies in the coming years.
As reported earlier this month, JPMorgan is working with Bahrain’s central bank and Bank ABC to launch real-time cross-border payments, and may also work on CBDCs later.
As covered recently, Chinese banks have introduced central bank digital currency hardware prototypes for multiple applications.