The Riksbank, Sweden’s central bank, has announced the launch of a year-long pilot project of its proposed e-krona. The project will use distributed ledger technology inspired by the blockchains that run cryptocurrencies, according to MIT Technology Review.
Physical cash is headed toward obsolescence in Sweden. Nearly everyone uses a mobile payment application called Swish, and it’s been estimated that retailers could stop accepting cash by 2023. This concerns the country’s central bankers, for two reasons. First, they fear that if the payment infrastructure is left completely to the private sector, certain groups might be excluded. Second, if people lose the ability to convert what’s in their commercial bank accounts into a form of “cash” backed by the government, it might undermine their faith in the money system.
That’s why, a few years ago, the Riksbank began investigating the possibility of a state-backed digital currency that might play a similar role to the one physical cash plays today.
According to a press release, the pilot project will run until the end of February 2021. But there could be more tests.