Whatever the pros and cons of Central Bank Digital Currencies (CBDCs), get it now because one key component of a national digital currency that can benefit the new economy is missing. You can not. digital identity. If you want a case study, visit Sweden.
Where ABBA leads, we should follow
Sweden is one of the countries where cash is rarely used and is often cited in discussions about the future of cash as it is a very useful case study of what would happen in the absence of a national strategy for cash. (Not because of an explicit strategy, but because the merchant doesn’t want it and the customer doesn’t want to bother carrying it). However, as cash dries up, some groups are left behind and left out (hence the need for a strategy). The homeless may accept cards, but pensioners and refugees may be barred from the cashless world.
But the main reason I have always been interested in the trajectory of Sweden’s digital money is that in Sweden, proponents of cashless commerce are not only at banks and law enforcement agencies, but also at a wide range of levels, including trade unions and retailers. It means that it is a good church. And of course they had a great frontman. It’s a pop phenomenon he was ABBA he was Bjorn Ulvaeus (still playing holograms in London as I write this). He took the big step of making his ABBA museum cashless and the country has never looked back.
It may seem unbelievable in the US, but I regularly talk to people in Scandinavia who can’t remember when they last used cash. Transaction volumes have fallen to the point where handling becomes unprofitable for banks and merchants. And the impact is significant. Cash-related crimes such as bank robberies are down (20 years ago there were 200 bank robberies per year in Denmark compared to none last year), and so is tax evasion.black market seems to have contractedas Bjorn and others wanted.
(Interestingly, beyond the scope of this article, cryptocurrencies have so far not taken off in Sweden.)
However, there is a problem with just going cashless. When Swish, the instant payment app used by almost all Swedes, went down last year, we had a serious problem. This is one of the reasons why a CBDC should work in parallel with, rather than on top of, a bank payment network.
It’s the virtual world of the rich.
© Helen Holmes (2023).
That is why I am interested in the progress of digital currency in Sweden. The central bank of Sweden recently Third stage report of that e-Krona project. They were looking at how the e-Krona network could be integrated with their banking system, how e-Krona would work with existing point-of-sale (POS) terminals, and how an offline solution would work. rice field. They point to a number of lessons learned so far, saying that the drawback of shared ledger technology is that it is “often more complex and inefficient than traditional account-based systems,” and shared ledgers and smart Contracts may require more information sharing, and so on. The issue of personal data protection and bank confidentiality is more than Riksbank is satisfied. It is bound by their summary view that it has not been decided whether
Their hesitation is completely real. Inclusiveness, completeness and credibility issues need to be addressed, but the Swedish government’s own in-depth (900 pages) study, after two years of work, concluded that the e-Krona case: I’m here. not strong enough yet It also recommended that the central bank continue its CBDC research and submit a new proposal to the Swedish parliament in 2024.
it’s all about id
Written in the Spring 2023 issue Journal of Payment Systems and Strategyesteemed payments expert Michael Salmon explores a suitable ecosystem for Central Bank Digital Currencies (CBDCs), while financial inclusion is a goal of many central banks investigating CBDCs. , “The question of how to identify people efficiently and reliably needs to be resolved before CBDC can be considered realistic.” As you might imagine, he is absolutely right.
A Swedish government report admits that “too many people are stuck outside the digital system” and pressured Swedish banks to offer so-called “low-risk accounts” with limited functionality. (similar to the basic bank accounts we have in the UK, if like 1 million adults don’t have bank accounts) It’s about asking governments to create a digital identity infrastructure.
Like the UK and US, Sweden does not have a state-issued digital ID. There, everyone uses a bank-provided ID (which, as it happens, is now extended to include national IDs). That BankID has been around for years, it works, everyone uses it, but in practice many people are left out. That means you can’t use any kind of digital payment system, let alone get hold of his future CBDC wallet.
Don’t get ahead of yourself when it comes to FedCoin, BritCoin and e-Krona. We won’t do anything about digital money until we do something about digital identities.
Follow me please twitter again LinkedIn. check out my website or some of my other works here.
