Cash in circulation in Sweden is about 1% of its total Gross Domestic Product (GDP) as retail payments are virtually cashless, according to Bitcoinist.
This means that unless Sweden’s Central Bank issues a digital currency, the country would be completely reliant on the private sector in order to serve the payments market.
As part of the World Economic Forum’s Annual Meeting, the Central Bank of Sweden’s Deputy Governor, Cecilia Skingsley, has written an article to describe the challenges Sweden is facing.
As Sweden’s retailers are not compelled to accept cash and with the advent of the country’s citizens being open to new technologies, including payment card applications and even cryptocurrencies, the private sector is thriving. One such application is Swish, a payment application that has been downloaded by over half of the country’s population.
This however does lead to a challenge for the country notes Skingsley:
If cash stopped working, it would leave all individuals to rely on the private sector for access to money and payment methods. It would be a historical change without precedence.
This in turn means that if Sweden’s Central Bank chose not to react by issuing its own digital currency, it would need to accept that Swedes will no longer be accessing central bank controlled money.
This is not insignificant and certainly a sign of things to come, and a challenge that many of the technologically advanced countries will be faced within the near term.
It will be interesting to see how Sweden chooses to tackle innovation in this case.
To issue a Central Bank digital currency or not issue a Central Bank digital currency?
This excerpt/article was originally posted by the Bitcoinist. For full article, click here.
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