Sveriges Riksbank, Sweden’s Central Bank, has released results detailing the first rounds of trials into a Central Bank Digital Currency (CBDC). The report shows an analysis of how the digital currency was used. The report has shown areas of weaknesses in the e-krona currency. These issues need to be rectified before a larger public scope is included in the rollout.
Challenges in e-krona that need to be addressed
According to the released report, there is one primary concern regarding e-krona’s use by the public. E-krona is the digital currency that will be issued by Sweden’s Central Bank. E-krona was found to have a significant scalability issue. This limitation would inhibit the rate at which the currency would be adopted by the public.
During the pilot phase, it was established that e-krona could meet all its requirements of being used for transactions. However, the pilot phase only involved a small section of the public. To this end, the technology needed to be upgraded to meet retail transactions on a larger scale. Testing for the same also needs to be conducted.
The other area of concern entails privacy. A digital currency needs to keep the details of every transaction private, and for e-krona to achieve this, more tests have to be conducted. The bank stated that it was progressing with its analysis regarding this issue to determine which stored information is protected.
Mithra Sundberg, the head of the e-krona pilot project, added that new legislation was required before e-krona was fully implemented for the public. The trials regarding e-krona are expected to go on until 2026 to give the relevant authorities time to rectify the presented issues.
The race toward Central Bank Digital Currencies
Central Banks in developing countries around the world are competing to launch Central Bank digital currencies. These currencies will be powered by blockchain technology. The focus is now on Sweden to evaluate if they will manage to overcome challenges regarding e-krona and launch the currency as planned.
What do you think about which country will launch the first official digital currency?