RIKSBANK, SWEDEN'S CENTRAL BANK
Swedish bankers are concerned about overnight repo markets and wholesale liquidity problems if the e-krona is adopted. Sweden's proposed central bank digital currency (CBDC) is the e-krona.
- Sweden's Minister for Financial Markets and Housing, Per Bolund, Riksbank, commenced a central bank review of the e-krona, which will be completed sometime in 2022.
- According to a Reuters report, Swedish bankers' concerns have been growing since the e-krona's Feb. 2020 pilot, as Sweden is already among the world's least cash-dependent economies.
- By design, holders of e-krona could bypass commercial banks entirely and interact directly with the central bank.
- Many commercial bankers, such as Scandinavian Individual Bank CFO Masih Yazdi, expressed worries that e-krona might cause financial instability during "runs on the bank." As residents withdraw funds en masse from the CBDC and convert it to cash, those bills must be disbursed at physical bank branches.
- Similarly, banks require overnight repo markets, wholesale liquidity tools, and sophisticated institutional clearinghouses that do not exist in the CBDC ecosystem currently.