Swedish banks have expressed apprehension over the central bank’s proposed e-krona digital currency and how it could affect their industry.

With Sweden the nation that uses cash the least globally, the Riksbank has been considering taking digital payments using the e-krona mainstream. Late last year, Sweden’s financial markets minister, Per Bolund, said the Riksbank finance committee had launched a review into the prospects of switching the country to the digital currency, a study that will be completed in November 2022.

One concern expressed is that if people move their money out of deposit accounts and to the e-krona, this could leave banks short of funding and leave them to rely on wholesale markets for liquidity, said the report.

Masih Yazdi, CFO of corporate bank SEB, said this would risk financial stability by making banks take on more debt and possibly become unprofitable.

“I don’t think the Riksbank has really thought about this or come up with good answers,” he told Reuters.

Yazdi added that the central bank would be moving beyond monetary policy into areas like privacy. That’s because a blockchain-based digital krona would be traceable, unlike cash.

However, the central bank appears set on the project. Last October, Riksbank Governor Stefan Ingves called for the Swedish government to “review the concept of legal tender” and prepare legislation to make way for the e-krona.

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Swedish Bankers Air Concerns Over E-Krona Digital Currency Plan

by Mario Herndon
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