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Swedish Innovation: cashless and cryptocurrencies

To regain control over payments, the Sveriges Riksbank, the Swedish central bank, considers launching a fully electronic kronas.

The Riksbank may soon become the world’s first central bank to introduce a cryptocurrency while gradually removing its traditional currency from circulation.

IT companies are currently working on concepts of an electronic currency on behalf of the Riksbank. Their aim is to analyze the technical and legal possibilities of the e-kronas by the end of the year. The use of blockchains is still debated. Should politics give the go-ahead, a pilot project could start as early as 2019.

Sweden is a hotspot for cryptocurrency experimentation and innovation. The tech-savvy nation, whose capital is the second largest FinTech hub in Europe, has become home to several crypto mining and blockchain companies, attracted by highly qualified workers, low hydroelectric energy costs, and cold weather. While the Riksbank is investigating the possibility to launch a national digital currency, two options have emerged. The first option, similar to Bitcoin, would be to have blockchain-style registered system using peer-to-peer operate from a central database. The second option, a value-based system, would use an intermediary app or card with loaded credit, linking transactions to a database.

A recent survey by Insight Intelligence showed that only a quarter of Swedes use cash at least once a week, as less than 15% of transactions were settled cash. As a result, in 2017, 1, 2 and 5-krona were withdrawn. A growing number of restaurants and stores across the country have even begun refusing cash payments, advertising themselves as cashless businesses. An overwhelming number of bank branches are also now cashless.

The decline of cash is being attributed to technological developments and to a growing public interest in digital payment alternatives. Swedes' high level of trust in both institutions and new technologies has played a big role in people embracing a cashless lifestyle. However, concerns about fraud and data protection remain present in public debate.

Debits cards and Swish are currently the preferred payment methods in Sweden. Swish, used by more than 5 million Swedes, is a direct payment app used for transactions between individuals (P2P) in real time. It was created by seven major Swedish banks, Danske Bank, Handelsbanken, Länsförsäkringar, Nordea, SEB, Swedbank and Sparbankerna, in collaboration with the Riksbank. Swedish payment provider iZettle offers increasingly popular small businesses solutions, including mobile card readers, point-of-sale systems and invoicing software.