Banks in Sweden have voiced their concerns on how the proposed E-Krona digital currency would impact their industry. Sweden, which witnessed a decrease in the employment of cash for payments. It is ready to decide whether to go forward with its CBDC, e-krona, by November next year. However, Riksbank, the country’s central bank, stated that it would like to make e-krona payments as easy as sending a text if the project comes through.
According to Reuters’ report, the banks have emphasized that moving the nation to a digital currency dependent economy would result in lacking funds. This represents the banks would have to depend on wholesale markets for their liquidity. Masih Yazdi, a top executive of SEB, stated that this expansion would make banks inclined to take up more debt while making them more sensitive to lack of earnings. Moreover, he further explains that this could result in financial instability. The Swedish Bankers Association adviser, Rickard Eriksson, asks if the Central Bank intends to hold on to the funds or loan those funds.
Advantages of E-Krona in Sweden
However, the benefit of employing CBDC is that e-krona users can circumvent middlemen entities, like private commercial banks, and instantly connect to the central bank. Likewise, Riksbank presents more reasonable interest rates and security to its users, corresponding to local banks. If Riksbank should resolve on the latter, it indicates that banks in Sweden are at the mercy of the central bank as corporate loans and other mortgages depend on the Swedish apex bank’s terms.
Multiple central banks across the globe are now engaged in some CBDC exploration. The COVID-19 pandemic predominantly fueled digital currency projects. Moreover, in 2020, the Coronavirus outbreak pushed numerous customers to go cashless. The Central Bank of Sweden seems committed to seeing to the implementation of the e-krona. Governor Stefan Ingves, the bank’s chief, suggested that the government combine digital currency into its state’s affairs. Sweden already classifies as one of the nations in the world that makes usage of cash the least. Thus, the Riksbank has started to contemplate taking e-krona public.
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