Swedish central bank tests digital currency

Swedish central bank Riksbank said on Friday May 28 that it was working with lender Handelsbanken to test the digital currency e-krona, Reuters reported.

The collaboration will test how e-krona will be able to handle payments in a day-to-day setting, the bank said in the report.

Central banks around the world are examining the use of digital currencies (CBDCs) as cryptocurrencies enter the mainstream and the use of cash continues to decline. In addition, there has been an increased need for real-time cross-border payments.

“The e-krona pilot is therefore moving from a simple simulation of participants to cooperation with external participants in the test environment,” Riksbank said in a statement, via Reuters.

The Riksbank said in April that it wanted to include commercial banks in its next phase of testing to determine how the electronic crown could be used for different types of payment.

“For Handelsbanken, the project means the opportunity to participate in what could be one of the first digital currencies issued by a central bank in the world to be publicly available,” Handelsbanken said in a statement, Reuters reported.

So far, only the Bahamas have launched a CBDC. Sweden and China are the only other countries to have started testing electronic money.

Sweden’s central bank last month said that a possible e-money needs to be further tested before being deployed. The initial phase of its pilot project two years ago resulted in an e-krona network that simulated and tested the CBDC in an isolated environment.

“The solution tested during the first phase of the e-krona pilot met the performance requirements imposed in public procurement. But this took place in a limited test environment and the ability of the new technology to handle large-scale retail payments needs to be further investigated and tested, ”the bank said.

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