Sweden revives digital krona review as euro and stablecoin risks grow

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Sweden digital krona review

Highlights

The Riksbank is pressing Swedish lawmakers to revisit a central bank digital currency as only 5% of Swedes recently used cash and stablecoin risks rise.
Deputy Governor Per Jansson warned that legislation for an e-krona would take at least five years and that declining cash usage threatens kroner competitiveness.
Sweden’s central bank highlighted risks to monetary policy transmission and payment system resilience if the krona’s use dwindles or the digital euro launches in 2029.

Digital currency debate returns to parliament

As reported by Reuters, the Riksbank is urging lawmakers to revisit whether Sweden should introduce a central bank digital currency after a 2023 government inquiry concluded there was no urgent need for one.

The central bank was among the earliest to study a retail CBDC built on blockchain-based technology as consumers shifted away from cash toward cards and other digital payments. A Riksbank survey earlier this year showed that only 5% of Swedes used cash for their most recent purchase.

Riksbank Deputy Governor Per Jansson said Sweden's limited use of cash makes the issue more pressing. He said that if cash becomes digital and Swedish kronor are not available in a usable digital form, the currency may struggle to compete with more convenient payment tools that can be used easily across borders.

In a letter to legislators this month, the Riksbank also pointed to the rise of stablecoins as a potential threat to the krona's international competitiveness. Jansson said the central bank has not taken a formal position on introducing an e-krona and that parliament must decide, but he added that legislation and other preparations would take at least five years.

Resilience and monetary control come into focus

The debate is also widening beyond consumer payments to include financial stability and national resilience. The Riksbank has warned that if use of the krona declines, it could become harder for the central bank to transmit monetary policy effectively and safeguard the financial system.

Geopolitical tensions, cyber threats and the risk of power outages are also strengthening the case for more resilient payment infrastructure as part of Sweden's total-defence strategy. Amanda Sundstrom, a senior macro strategist at SEB, said the ability to make payments during an attack or electricity blackout is one of the most vulnerable parts of society and should rank high on the defence agenda.

The timing is significant because the European Central Bank could launch a digital euro in 2029. Jansson said that if Sweden wants a digital krona and hopes to avoid falling too far behind, it makes sense to begin the work now.

In our earlier article, we examined Mario Draghi’s warning that fighting inflation and containing debt can end up suppressing the investment needed for long-term growth and resilience. We noted his argument that central banks should keep inflation control as the priority while avoiding interest-rate paths that become more restrictive than necessary, because tighter policy can raise borrowing costs and weigh on productivity. The piece also highlighted how clear central-bank communication can narrow uncertainty about future rate paths and reduce unnecessary market volatility.

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