[acuster]

Kudos to the swedes for working methodically to try to find a way for the central bank to issue digital money. They have been working for a number of years on this and seem to be thinking effectively about all of the issues involved.

One of the reasons that most interest me in this type of digital money comes from its use by the government itself within its various branches. Moving the financial accounts of the government from internal systems to a public blockchain potentially opens up the government accounts to public scrutiny in a way that has not yet been possible. This offers a potential for transparency which matters less, perhaps, in Sweden, than in other governments around the world.

[koala_man]

As a historical fun fact, Sweden was also the first country in Europe to adopt paper money. They needed more currency but didn't have access to the Americas and its precious metals to mint coins.

Currently, 1 US Dollar is worth around 10 Swedish Kroner. Both currencies ultimately started out equally at 1oz silver, but since Sweden could easily just print more, they couldn't contain themselves and caused a 4x inflation in the 1700s (the other ~2.5x is since WW2).

[beefield]

> Kudos to the swedes for working methodically to try to find a way for the central bank to issue digital money.

Can you elaborate what you mean by digital money? My understanding is that vast majority of money issued by central banks is already digital.

[lucozade]

Sweden is moving unusually rapidly to a cashless (or near cashless) society. A lot of countries are seeing big increases in the use of digital payments but generally not big decreases in the value of cash payments although that may well come eventually. In Sweden it's already happening.

Like most central banks, the Riksbank runs 2 credit risk free payment systems: one that supports commercial banks and another, cash, that supports both companies and the general public.

The central bank's relationship with commercial banks isn't really affected by this initiative. However, the thinking is that a credit risk free payment system for the general public is still valuable for the reality/perception of a stable financial system.

If cash (effectively) goes away then so does the second payment system. What the Riksbank are doing is looking at alternatives that have the payment system properties of cash but in a digital form.

As I understand it, they're looking at a couple of models. A digital cash equivalent i.e. mostly anonymous peer to peer. And an account balance based i.e. central banking accounts for joe public.

It's interesting work and, in my opinion, likely to be followed closely by other central banks as I'm sure they are predicting similar dynamics in the next 20-30 years.

[acuster]

You are right, of course, that most of the accounts at the central bank are digital. Also, 'money' is a loose term and 'digital money' much more so. I used the term loosely since fully defining it would take a lot of time and space.

The difference of the initiatives, such as the 'e-krona' project, comes from central banks asking themselves whether the public at large could have an obligation, direct from the central bank, in digital form. Most cash is an 'obligation' to some central bank, a guarantee backed by them. Yet no individual citizen can hold a digital account with the central bank. A natural question is 'why not'? Up to now, it has been mostly practical, that the bank did not want to have to run a retail system. The rise of digital currencies has opened a new possibility: the central bank could run the system and not need to run retail operations. Thus, the research and experiments.