Sweden might be getting its own digital currency

The Riksbank is mulling over a game-changing break from cash...

Sweden might be getting its own digital currency

A touch payment is demonstrated in west London | Image: Matt Crossick / PA Archive/PA Images

Sweden's Riksbank is considering becoming the first major central bank in the world to have its own digital currency.

It is weighing up the legal and logistical implications of creating the "e-krona" before making a decision, as well as assessing the financial stability of such a move.

The Scandinavian country has already been witnessing the slow death of cash in recent years, with the amount of notes and coins in circulation having fallen by 40% since 2009. Cash withdrawals have dropped roughly one-third in number and value over the last five years.

Indeed, cash use is so low that the Riksbank has admitted it is under pressure to offer digital money to private individuals, as central banks already do for commercial banks.

The bank's deputy governor Cecilia Skingsley said in a statement:

"The less those of us living in Sweden use bank notes and coins, the clearer it becomes that the Riksbank needs to investigate whether we should issue electronic money as a complement to the money we have today."

Skingsley noted that the rapidly changing transaction habits of Swedish consumers would mean the Riksbank will make a decision on the issue before any other nation.

If the e-krona gets the go-ahead, Sweden will have to make a call on whether the money will be booked into accounts or work as a type of independent, digitally transferable unit.

"This is something entirely new for a central bank and there is no precedent to follow," she said.

Elsewhere, the Bank of England examined the macroeconomics of central bank-issued digital currencies in a working paper published in July, while Canada and China are also reportedly investigating the idea.