A new way to pay is causing existential angst among Swedish bankers who worry that the e-krona, an electronic equivalent of Sweden’s currency, could cost them their deposit base.
Sweden launched a review into the e-krona’s feasibility in December after a pilot programme at the central bank, making the Nordic country a litmus test for digital currencies.
The Riksbank wants making payments in e-krona to be “as easy as sending a text”, but bankers in Stockholm say this would radically change the dynamic of the banking system.
Like a banknote or coin, the holder of an e-krona has a direct claim on the central bank, effectively bypassing commercial banks, where most state-backed money is held.
“A rational household would hold its money with the Riksbank,” Masih Yazdi, chief financial officer of Sweden’s largest corporate bank SEB, told Reuters, adding that a central bank offers better interest rates and protection.
As people use less physical cash and alternative currencies such as Bitcoin gain ground, many countries around the globe are looking at issuing their own central bank digital currencies (CBDC).
The Bahamas launched the world’s first CBDC in October and China is expected to have a digital yuan within two years.