The Swedish Central Bank has released a statement discussing the potential implications of a digital Euro on the Swedish krona. According to the bank, a digital Euro would not necessarily replace the krona, but rather offer a safer and more competitive payment system.

A Shift in Payment Systems

The bank notes that there may be a small shift away from traditional bank deposits, but the proposed cap on individual holdings of the digital Euro would have a limited impact. Additionally, the digital Euro could be accessible to individuals and businesses both within and outside the Eurozone, providing equal access to the payment system.

Institutional Factors at Play

The Swedish Central Bank believes that institutional factors would not displace the krona, as payments involving the government are made in Swedish krona and the krona is established as the country's primary currency. Therefore, Swedes and businesses tend to prefer the krona, and the digital Euro would not pose a significant threat to its stability.

The EU's Digital Euro Project

The European Central Bank launched the digital Euro project last year, and progress is being made. The project aims to set rules, select private sector partners, and conduct tests and experiments. The draft proposal highlights the advantages of the digital Euro, but also notes potential risks, such as limiting individual holdings to between 3,000 and 4,000 euros.

Sweden's e-Krona and the Digital Euro

A potential disadvantage of the digital Euro is the risk of threatening the stability of the Swedish Krona, particularly if high inflation causes price fluctuations. However, the e-krona, or digital krona, could strengthen the Swedish krona in the local market if the digital Euro gains widespread acceptance. Leveraging the technology and regulations developed for the digital Euro could also reduce the cost and complexity of launching the e-krona, leading to smoother cross-border payments.