Sweden’s Central Bank Finally Embraces DLT, but Only in Simulation Mode

Sweden’s central bank will soon trial a blockchain-based digital currency – but it’s still in its very early stages, at best.

Announced Thursday, Sveriges Riksbank’s e-krona pilot is the latest attempt at a central bank digital currency (CBDC) from an institution that for years fretted over basing any such project on distributed ledger technology (DLT).

For now at least, the e-krona pilot is set to move forward on a limited basis. Built by Accenture and based on R3 Corda, Riksbank’s digital currency trials will run as a simulation through February 2021, at which point Riksbank could extend the project for another six years.

The pilot will not involve any banks or end-users; everything will be simulated within the central bank’s closed network. Accenture is still preparing the final system for testing, according to Riksbank’s press office.

This high-profile investigation of digital government money will “increase [Riksbank’s] knowledge” of CBDCs, the bank said in a report. But it will also better Riksbank’s understanding of DLT and “blockchain technology,” two nearly synonymous tech solutions (in the bank’s stated view) that it spent nearly three years arguing was too “immature” to use for the e-krona pilot.

Forced into action by its citizens’ deep aversion to cash, Riksbank has been talking about developing a possible “e-krona” since at least November 2016. But it was never clear about what technology could power a Swedish digital currency.

DLT has been an option since the project formally began in September 2017. But it was hardly the obvious choice for a bank that saw the “existing tried-and-tested” centralized technologies as perhaps more compelling.

“From a purely technical point of view, we can see nothing at this point in time that would prevent an e-krona solution built around a central register,” Riksbank wrote in that first e-krona project report. “RIX, the Riksbank’s system for the transfer of funds in accounts, is, for…

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