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Bandwagon Effect - Sweden Begins Work on National Digital Currency
As the world turns, as new technology comes to bear every year, every month, every day, if you are standing still, you are really falling behind. The days of major banking systems resting on their laurels and not innovating are at an end. The world’s banking industry is now fully mobilized into the future of digital currency, and ever-progressive Sweden is not about to be left behind, as they begin work on a potential future national digital currency.
The most likely place on Earth to see a fully digital economy
Sweden has been on the march against cash for many years now, and their regulations have led a drop in cash circulation of about 40% since 2009. The vast majority of financial transactions are done by debit card or other non-physical means. Officially, they are looking at making a decision on issuing what would be known as the e-krona within the next two years.
The diminished level of cash transactions in Sweden is no accident, and the qualifiers by regulators mean little. It is not a matter of if Sweden goes fully digital, economically, but when, which they mention as early as 2018. How the head of Sweden’s central bank speaks about it, it seems a foregone conclusion.
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“This is as revolutionary as the paper note 300 years ago. What does it mean for monetary policy and financial stability? How do we design this: a rechargeable card, an app or another way?” Cecilia Skingsley, deputy governor at the Riksbank, told the Financial Times.“We really have no one to look at when it comes to how to design it and what are the possible consequence … It’s not an option for us not (to) do anything,” said Ms. Skingsley.
Sweden closed circulation of their 1000 krona note in 2013, and retail cash transactions dropped to 20% in 2014. This contrasts sharply with the United States, for example, where cash and electronic transactions are still close to 50/50, so the handwriting is on Sweden’s wall.
Many of the nations of the world are closing in on making a domestic digital currency, most likely modeling Bitcoin on a closed-loop, and using Bitcoin blockchain technology. The nations that have publicly discussed going this route in the not-to-distant future include China, Australia, the United States, the Ukraine, Great Britain and Canada, just to name a few. Smaller, more economically nimble nations like Tunisia and Senegal in Africa, are already there, and just waiting for the rest of the world to come aboard.
It is easy to believe that by the end of the decade, there will be double-digits of countries running a fully digital economy, and there could be dozens of them. Whether this is actually good for the citizens affected by these national banking initiatives is highly questionable, and will be a topic for another day.
