Digital Euro Use Won’t Push Out Swedish Krona: Central Bank
Adopting a potential digital euro won’t displace the Swedish krona, Sweden’s central bank said.
In a staff memo published Tuesday, the Sveriges Riksbank indicated it sees potential benefits for Sweden in the digital euro. It highlighted the possibility of a more robust and competitive payment system.
The bank added that there may be a small shift away from traditional bank deposits. However, the Riksbank believes any impact will be limited due to the proposed cap on individual holdings of digital euros.
Using the digital euro might extend beyond the eurozone. While it’s designed for eurozone countries, a proposal allows non-eurozone members to potentially join the system through agreements with the European Central Bank (ECB). This could give residents and businesses in those countries access to the digital euro on equal footing with those in the eurozone.
Sweden’s central bank downplayed the impact of a potential agreement, arguing that institutional factors won’t “crowd out” the krona. Firstly, payments involving the government are conducted in Swedish kronor, solidifying its position as the primary currency, it said.
“For instance, given we pay our taxes in Swedish kronor, we also prefer to receive our salary in Swedish kronor,” the Riksbank said. “And when businesses pay salaries, their main expenditures, in Swedish kronor, they prefer to charge customers in Swedish kronor.”
Also, Swedes can use digital euros even if they haven’t visited or lived in the eurozone before. Meanwhile, businesses in Sweden can accept digital euro payments, but they must transfer them directly to a bank account, just like businesses in the eurozone.
The European Central Bank (ECB) launched a two-year planning stage for the digital euro project
