The e-krona and crypto currencies: Digital financial assets - OECD workshop 15-16 May 2018

1. The E-krona and
Cryptocurrencies
Gabriel Söderberg
Sveriges Riksbank and Uppsala University
OECD, 15 May 2018, Paris, France

2. The e-krona and
cryptocurrencies
OECD, Paris (2018-05-15)
Gabriel Söderberg

3. ”Some central banks, including the world’s oldest, Sweden’s Riksbank, have mooted
creating their own cryptocurrency in response to the declining influence of cash a means of
payment.”
(Financial Times, March 12 2018)

4. Agenda
• Background of e-krona
• Risk?
• A cryptocurrency?

5. Cash in circulation and card usage in selected developed countries: 2007 –
2016
Note: The beginning of the arrow is 2007 and the end is 2016 Source: BIS

6. • ”Contemporary monetary systems are based on the mutually reinforcing roles of
central bank money and commercial bank monies.” – BIS, 2003
• Central bank money:
• Financial institutes: central bank reserves
• The public: cash
• A situation where cash is crowded out by commercial bank money forces us to start
thinking: What will happen when the public does not have access to central bank
money?

7. No public access to central bank money?
• Ensuring access to zero risk money
• Ensuring resilience
• Every-day malfunctions
• Cyber attacks/war/natural disasters
• Financial inclusion
• People without bank accounts
• People with difficulties
• Efficiency
• Future concentration
• Other factors?
• Conclusion: too many factors for a central bank to ignore

8. E-krona at a glance
• No decision taken yet
• Two main options
• Register-based
• Value-based
• Technological choices left open
• Decision by Executive Board late 2018

9. Stability risk?
• Zero interest rate or lower than bank deposits  low attraction in normal times
• Run risk is a problem also without CDBC
• Stronger regulations to reduce risk of bank runs
• Upgraded deposit insurance guarantee
• Resolution for larger institutes
• Quantitative restrictions on e-krona is always an option

10. What is money?
• Broad historical perspective
• Different views are connected to historical attempts to solve concrete problems in the
monetary system
Definition Villkor
Metallism Consist of or be tied to a good with independent market value
Chartalism Legal creation issued by a state
Funcftionalism Must act as:
1) Means of payment
2) Unit of account
3) Store of value

11. Poor means of payment and store of value
0
5000
10000
15000
20000
25000
Feb04,2017
Feb14,2017
Feb24,2017
Mar06,2017
Mar16,2017
Mar26,2017
Apr05,2017
Apr15,2017
Apr25,2017
May05,2017
May15,2017
May25,2017
Jun04,2017
Jun14,2017
Jun24,2017
Jul04,2017
Jul14,2017
Jul24,2017
Aug03,2017
Aug13,2017
Aug23,2017
Sep02,2017
Sep12,2017
Sep22,2017
Oct02,2017
Oct12,2017
Oct22,2017
Nov01,2017
Nov11,2017
Nov21,2017
Dec01,2017
Dec11,2017
Dec21,2017
Dec31,2017
Jan10,2018
Jan20,2018
Jan30,2018
Ethereum Bitcoin Bitcoin cash Ripple Cardano

12. Cryptocurrencies can’t be classified as money
Definition Established currency Cryptocurrency
Metallism
Chartalism X
Functionalism X

13. The e-krona would not be a cryptocurrency
• Issued by the Riksbank  claim on the Swedish state
• Expressed in Swedish SEK covered by the Riksbank’s inflation target
• The Riksbank has final responsibility for the infrastructure  transaction fees cannot
be allowed to fluctuate
• Conclusion: The e-krona would be issued by a state and managed by the Riksbank so
that the three basic functions of money are filled