[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.