Like cryptocurrencies such as bitcoin, CBDCs can be blockchain-based. But while bitcoins are generated by “miners” operating without central oversight, CBDCs would be issued by the central bank and pegged to a national currency to avoid wild fluctuations in value.
“What we have learned from Sweden is [creating a CBDC] is harder than you think, ”says Rainer Böhme, professor of virtual currencies at the Austrian University of Innsbruck.
“Once you go in one direction, there is often no turning back,” Böhme adds. “Either the way back is very expensive and involves a loss of reputation and of course reputation and trust are the main assets of a central bank.”
These risks created a non-binding approach at Riksbank, even after four years of research.
The pilot project outlined several possibilities for operating an e-krona, including a ‘token’ system where the e-kronor could be stored in a digital ‘wallet’ and an ‘account-based’ system where the e-kronor could be stored in a digital ‘wallet’. central bank issues e-krona that people would still keep in commercial bank accounts, meaning the difference would barely be noticeable for most.
Sundberg points out that these ideas are only tests and that the underlying technology could still change drastically.
Cash use collapsed immediately after the start of the pandemic and still has not recovered: