Sweden Central bank, Sveriges Riksbank said that it has completed the first phase of the digital currency pilot project and that the technology needs further study.
Sweden’s Central Bank Discovered Key Issues
After completing the first phase of their digital currency pilot, Sveriges Riksbank discovered some key issues that need to be addressed before Stockholmers can buy coffee and Kanelbullar with e-krona.
In a recent study, the Central Bank of Sweden demonstrated its experiment’s first results on the central bank’s digital currency in a network based on the R3 Corda blockchain.
The Riksbank simulated the core aspects of the potential CBDC system, including the liquidity provided by the Riksbank’s settlement system, RIX, and network members as e-krona distributors. The central bank also simulated participants, end users and payment tools such as mobile applications.
The Riksbank stated that the new CBDC technology needs further research and that scalability has become a major bottleneck.
The report says,”The solutions tested in the first phase of the Swedish Krona electronic pilot have already met public procurement performance requirements. However, this was done in a limited test environment. The ability of the new technology to manage large-scale retail payments requires additional requirements Investigation and test.”
The central bank also noted some privacy issues, stressing the need to protect the information in e-kronatransactions to comply with banking secrecy laws and avoid the disclosure of personal information.
The bank said, “The Riksbank is currently analyzing the extent to which the information stored in the transaction history can be viewed as banking secrecy information and whether the information contains personally identifiable information.”
Digital Krona needs extensive legal framework
Mithra Sundberg, head of the Riksbank e-krona unit at Stockholm, said the Swedish CBDC may need a new legal framework before it can be used. Given the multitude of issues that need to be resolved before the e-krona is seriously developed, the Riksbank can continue its blockchain trials until 2026.
Swedbank said it will expand its agreement with accounting giant Accenture as a technology supplier to continue the Swedish e-krona test. The second phase’s focus will be on potential distributors of e-krona, the CBDC service in retail payments and storage methods. In the new phase, electronic offline cloning and integration into existing sales terminals will also be tested.