Sweden’s Central Bank Teams Up with Largest Bank to Test New Digital Currency

Sweden’s Central Bank (Sveriges Riksbank) and SEB Group, Europe’s largest bank, have announced a partnership to test a digital currency based on Sweden’s national krona (SEK). The bank will also give its customers the ability to buy, sell, and store the digital currency on their accounts. The partnership is aimed at helping Sweden’s central bank understand how a digital currency might function, and how it might affect Sweden’s financial system.

Since the world has been moving towards digitalization, the Swedes have been moving in that direction as well. In March of this year, the central bank of Sweden, the Riksbank, along with Swedbank and the city of Stockholm, have made an agreement that will allow them to test a new digital currency called SEK.

On July 3, the Riksbank, Sweden’s central bank, announced it would be collaborating with SEB, the largest bank in the country, to test a new digital currency. The new digital currency will work like any other currency, however, the Swedish Riksbank is introducing a new feature to the digital currency which will allow it to be used for interbank payments.

Swedish central bank Riksbank today announced that it is entering the next phase of its pilot project with the central bank’s digital currency. During this phase, the bank will work with Sweden’s largest bank, Handelsbanken, and digital services and software company TietoEVRY to create a new test environment for the e-krona project. After the simulation phase, the Riksbank wants to know how well the e-krona platform works when integrated with a commercial bank. The involvement of external entities as participants in the test environment will enable the Riksbank to assess the integration between the participants’ existing systems and the e-krona pilot project’s technical platform, the bank said in a statement. Benny Johansson, Head of Nordic Payments at Handelsbanken, says about the partnership For Handelsbanken, this partnership gives us the opportunity to test the benefits that a currency can offer, and it also gives us the chance to create value for the bank, our customers and society as a whole.

E-Krona phase

The Riksbank announced the e-krona pilot program in April. The Riksbank has launched a pilot project to develop a proposal for a technical solution for the central bank’s digital currency, the electronic crown, which can act as a complement to cash. The aim of the pilot project is to demonstrate in a text-based environment how e-croon can look, work and be used by the public, the bank said. In the report on pilot phase 1 of the e-krona project, the bank mentions that it sees a potential problem in the decline of cash, and is therefore exploring the possibilities for a digital complement to cash. (The report describes the technical solution tested in the deployment phase and the legal aspects of e-krona).

Technical aspects

The electronic crown, which is being tested in the first phase of the pilot project, is based on tokens in a distributed network based on blockchain technology. A token-based electronic crown means that the end user can store tokens locally, like cash. The e-krona will follow the principle that the Swedish krona will always have the same value regardless of how it is stored, so the currency will be exchanged on a one-to-one basis, according to the report. As regards distribution, the Riksbank uses distributors called participants (banks and payment services). These participants have relationships with the general public. The distribution network of e-krona consists of the following nodes: the Riksbank’s node, which creates and destroys tokens; the notary’s node, which verifies whether the token is used for the first time; the participants’ nodes, which also verify the authenticity of the tokens; and the end users, who use digital wallets to deposit and withdraw tokens.

Legal aspects

In terms of regulation, the bank expects e-krona to be subject to anti-money laundering and anti-terrorist financing legislation, which requires institutions to know their customers. In the tested model, the members of the network are responsible for KYC verification and transaction monitoring. In addition, accounts cannot be anonymous under current law, which should be taken into account when discussing a potential anonymous e-cigger. It is possible that anonymous electronic wreaths exist, but their scope would be very limited, the report said.Sweden’s central bank has teamed up with the country’s largest bank to test an experimental digital currency developed by a Umeå-based startup. The Riksbank has partnered with Swedbank, in an effort to test the feasibility of a solution developed by iZettle, the company behind the ubiquitous mobile payment app, and Sweden’s largest bank.. Read more about where to buy e-krona and let us know what you think.

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