World’s Oldest Central Bank to Extend Digital Currency Project till 2022
Swedish bank Riksbank is set to extend the pilot project for a central bank digital currency by a year. According to the bank, this enables more comprehensive consultation from professional services firms and ensures proper deployment of the digital currency.
More Developments Towards Digital Krona
Riksbank revealed this development in a press release on Friday, 12 February 2021. According to the bank, the digital Krona project will run until February 2022. Riksbank also revealed that it would continue to work on an alternative technical solution for the digital Krona as a supplement to cash.
According to the bank, this will lead to an increase in its knowledge of the technology powering the digital currency. The financial institution will also continue developing other products focused on improving its digital currency platform in terms of performance and scalability.
There are also plans to extend testing to offline functions and bring external participants to monitor test results. The world’s oldest bank recently suggested that the proposed e-krona should be open-based and not feature privacy. “As all CBDC payments involve a remote ledger, no CBDC can be genuinely peer-to-peer, offline and anonymous like cash.”
Concerns Remain About The Digital Krona
The development of the digital Krona has raised some concerns within the Swedish financial industry in recent months. Some industry experts have questioned the viability of a national digital currency and its effect on the existing banking system.
The lack of clarity over the issuance of the e-krona has also caused problems in recent months. Sweden’s central bank has been studying CBDCs for some time and has carried out significant testing that dates back more than a year. The Swedish government is yet to make a significant legislative move towards developing a digital currency despite intense pressure from the central bank in 2020.
However, there could be a change in sight following the effect of the coronavirus pandemic. There has been a reduction in the amount of traditional cash in circulation as more businesses move online amid the current movement restrictions.
It is understood that the Swedish government is mulling a move towards developing a digital currency as a potential solution. Nevertheless, there are still questions still regarding the design of the e-krona and the technology that will be deployed with it.