Libra is the reason why Sweden is now very likely to continue with its digital krona. The boss of the Swedish central bank said in an interview with CNBC that Libra has been ‘an incredibly important catalytic event’ for central banks around the world. Sweden has already been playing around with the idea of a central bank digital currency.
In November 2018 the country announced a test for issuing a digital currency called e-krona. Back then Stefan Ingves of the Swedish central bank said:
“It is important to update the money the Riksbank issues to a format that suits the modern economy. We will therefore develop a pilot version of a central bank digital currency – an e-krona. Once we have tested the pilot version we can choose to issue, or not to issue, a digital krona to the general public.”Press release Sveriges Riksbank (06/11/2018 – 16:15)
Sweden already is a forerunner, as cash is hardly used in the country. Only two percent of all transactions are done with cash. In the entire country only twenty percent of all stores accept cash. Credit cards, debit cards and mobile apps are the most common ways to pay in a shop. The country only needed the announcement of Libra to see that a digital krona was indeed a good idea.
Sweden ahead of the game
Sweden already has lots of experience in having a cashless society. In China the same thing is happening. Currently many Chinese pay using services like Alipay and WePay. When the Chinese central bank will introduce a digital yuan, it won’t have a major impact in the way people deal with money.
In Europe and the United States cash is still king. Even though some might argue that credit and debit cards are more popular. That’s probably why most central banks in the western world have been sleeping. The announcement of Libra has been a wake-up call to most of them. As a result Germany now wants a digital euro. In addition in the United States there are lawmakers who want a digital dollar. Switzerland already announced a central bank digital currency. ING Bank expects all central banks to issue a digital currency within the next three years.
Also published on Medium.