Sweden’s Central Bank Governor has outlined a six-step plan on how the state bank can implement its own digital currency.
He outlined a checklist that needs to be completed before the idea is fully implemented. Sweden’s digital currency will have to meet the following criteria.
- It will have to be available 24/7 and allow for payments anywhere, no matter how big or small.
- Cross-border transactions are a must. The Swedish digital currency must also be easily convertible to other fit currencies, as well.
- Legal tender laws must be updated to include digital currencies in their jurisdiction.
- The digital currencies will be issued directly from banks themselves, with oversight from the Swedish Central Bank.
- Digital IDs will accompany digital currency to prevent money laundering and improper use.
- Physical cash must still be kept just as a safeguard in case the digital currency systems fail.
The timeline for meeting each six of these points is still open for discussion, but we probably cannot expect a fully fleshed-out Swedish digital currency until 2021, at the earliest.
Sweden Following China and Turkey
Sweden’s dive into digital currencies is in line with trends in other nations who seek to adopt a similar concept.
China, for example, says it is almost ready with its own state-backed digital currency, called the ‘DECP.’ It will be a pegged stablecoin, of course.
Other countries, like Turkey, plan on releasing similar state-backed stablecoins in the coming years.
In short, there is something of a ‘global arms race’ among nation-states over which one can be the first to release such a financial instrument.
Bitcoin Replacements
The rise of state-backed stablecoins is a net boom to the cryptocurrency world but, ultimately, their purpose is to replace speculative cryptocurrencies.
However, Bitcoin’s resilience has proven that cryptocurrencies can’t simply be ‘replaced’ — they are part and parcel of the blockchain industry. Therefore, although these central banks believe they are creating stablecoins to replace Bitcoin, they will soon realize that such a task is near impossible.
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