
Sweden’s central bank says it has begun testing an e-krona - pseudolus
https://www.reuters.com/article/us-cenbank-digital-sweden/sweden-starts-testing-worlds-first-central-bank-digital-currency-idUSKBN20E26G
======
lawn
> The pilot will run until February 2021 and will use block-chain technology,
> the Riksbank said.

Will it really?

Riksbanken can have a central server to resolve any double spends, which is
only really a problem in a decentralized network. Once you have a singular
authority you can just let them decide, and you'll have no need for an
inefficient cryptocurrency.

> which is being developed by consulting firm Accenture

Accenture is quite famous for developing bullshit solutions for made-up
problems, so I guess this is a good fit for them.

> The sharp decline in the use of cash and competition from alternative
> currencies, such as Facebook’s Libra, has also prompted central banks around
> the world to consider issuing their own electronic currencies.

This is poor reporting, as e-krona predates Facebook's Libra, which is still
far from being launched. They probably mean the perceived competition from
Bitcoin.

~~~
socialdemocrat
Problem with a central server for money is that it makes the whole state
vulnerable. If everybody use central bank e-currency you can just attack their
sever to destroy the flow of all money.

But if it is distributed like real crypto currency, you have to be able to
attack and take down hundreds or thousands of severs geographically spread.

~~~
teh_infallible
I don’t know why your comment is being downvoted. That was my understanding as
well. A distributed ledger is much harder to tamper with, which is why
“blockchain technology” is actually a reasonable solution to this problem,
IMO. I am open to being proven wrong, though

~~~
lawn
I did not downvote him, but a cryptocurrency is only tamper proof because the
entities that decide the rules are distributed (in Bitcoin it's the miners who
extend the blockchain). So to being down the Bitcoin network you need to bring
down all the miners, which is basically impossible.

But here there's only a single entity that decides the rules. So if you shut
down riksbanken's servers, the servers that are deciding which transactions
are valid, you essentially shut down the network.

Sure you can have thousands of servers around the globe sharing the last seen
state or new but not yet verified transactions, but that's not a very useful
network. They would instantly be discarded once riksbanken's servers come
online to sort out the mess.

You can have this problem in Bitcoin too, if you isolate a majority of the
miners from the rest of the network, essentially splitting it in too. But
that's much harder to do.

Edit: Here I refer to deciding double spends, which the critical problem any
digital currency needs to solve. Without it anyone can print money out of thin
air.

------
surfsvammel
My company’s suggested implementation made it to the second round of
proposals. Unfortunately we are not involved any more.

There are some serious challenges that needs to be ironed out. Two that comes
to mind is how to solve offline payments, the other one is how to live up to
the requirement from the government that the currency needs to be liquid also
during a crisis (what if electricity or telecom doesn’t work?)

The Riskbank have had a hard time steering towards the inflation goals.
Cutting the commercial banks from that chain, and giving interest, for
example, directly on the currency, would make The Rikabanks job a lot easier.

~~~
navidfarhadi
> My company’s suggested implementation made it to the second round of
> proposals.

If you don't mind me asking what company do you work for? I am actually
studying computer science (security and privacy emphasis) at KTH in Sweden and
I have been interested in CBDC for some time now. If your company offers
master's theses I would love to connect on LinkedIn or via email.

> the other one is how to live up to the requirement from the government that
> the currency needs to be liquid also during a crisis (what if electricity or
> telecom doesn’t work?)

This is the first thing I thought of when reading the article. Since you seem
to have some knowledge about the field, what are some proposed solutions to
this problem?

The article mentioned something that I find particularly interesting:

> Sweden is the least cash-dependent country in the world, making it a litmus
> test for how central banks can react to people using less of the money they
> print.

To be honest I had my suspicions that this was the case. Anecdotally, I have
lived in Sweden since August of 2018 and I cannot recall a single time where I
have carried cash in my wallet or used cash for a transaction in Sweden. If I
am not paying with a credit/debit card I usually just use Swish (similar to
Venmo or Cash app for US readers, except it's operated by several Swedish
banks and I believe the Swedish central bank).

~~~
dublinben
How do those without bank accounts like tourists or the indigent operate in
this "cashless" system?

~~~
PeterisP
Tourists tend to have cards and use them.

The poor people have bank accounts, because if you're poor and getting some
gov't assistance, that gets transferred to a bank account (I mean, how else?
No non-financial institution or gov't agency is going to employ tellers
handing over cash directly, they all use banks for that, and checks aren't
used); it's general EU policy that basic financial services (bank accounts,
bank transfers, electronic bill paying, card payments) should be available to
everyone including the very poorest. Even a homeless, unemployed drug addict
would be expected to have access to these services.

------
acuster
Kudos to the swedes for working methodically to try to find a way for the
central bank to issue digital money. They have been working for a number of
years on this and seem to be thinking effectively about all of the issues
involved.

One of the reasons that most interest me in this type of digital money comes
from its use by the government itself within its various branches. Moving the
financial accounts of the government from internal systems to a public
blockchain potentially opens up the government accounts to public scrutiny in
a way that has not yet been possible. This offers a potential for transparency
which matters less, perhaps, in Sweden, than in other governments around the
world.

~~~
beefield
> Kudos to the swedes for working methodically to try to find a way for the
> central bank to issue digital money.

Can you elaborate what you mean by digital money? My understanding is that
vast majority of money issued by central banks is already digital.

~~~
lucozade
Sweden is moving unusually rapidly to a cashless (or near cashless) society. A
lot of countries are seeing big increases in the use of digital payments but
generally not big decreases in the value of cash payments although that may
well come eventually. In Sweden it's already happening.

Like most central banks, the Riksbank runs 2 credit risk free payment systems:
one that supports commercial banks and another, cash, that supports both
companies and the general public.

The central bank's relationship with commercial banks isn't really affected by
this initiative. However, the thinking is that a credit risk free payment
system for the general public is still valuable for the reality/perception of
a stable financial system.

If cash (effectively) goes away then so does the second payment system. What
the Riksbank are doing is looking at alternatives that have the payment system
properties of cash but in a digital form.

As I understand it, they're looking at a couple of models. A digital cash
equivalent i.e. mostly anonymous peer to peer. And an account balance based
i.e. central banking accounts for joe public.

It's interesting work and, in my opinion, likely to be followed closely by
other central banks as I'm sure they are predicting similar dynamics in the
next 20-30 years.

------
kragen
This headline is goofy. Central banks have been using digital _electronic_
currencies for decades. The difference is that now they want to include all
Swedes in the electronic currency system, not just Swedish banks, as they have
been for decades. (And the claim that this uses "blockchain technology" is
just a lie; it's a centralized database. It's no more a blockchain than Git
is.)

I think this is a terrible idea given both the current appallingly bad state
of _unintended_ vulnerabilities in computer security and the appalling
_intended_ security vulnerabilities inherent in centralized architectures like
the one they're proposing.

~~~
socialdemocrat
Most of your money is already on a centralized architecture of you are using a
bank. But I agree that a decentralized system would be preferable.

However I can see a benefit in electronic money becoming a public utility
rather than being controlled by private companies trying to extract rent.

Visa and MasterCard engage in massive rent extraction.

Would have been nicer with some form of robust international system for money
transfer and exchange where middle men could not nickel and dime you the whole
way.

~~~
kragen
> _a decentralized system would be preferable. ... a public utility rather
> than being controlled by private companies ... Would have been nicer with
> some form of robust international system for money transfer and exchange
> where middle men could not nickel and dime you_

Well, in fact, the system you are describing has existed for 11 years and
inspired the Swedish system being discussed here; presumably the attributes
you are wishing for are precisely the ones that they want to eliminate by
creating their own private system instead of just using Bitcoin.

------
aazaa
This effort betrays a supreme misunderstanding about what makes Bitcoin
important.

"Blockchain technology" is not what makes Bitcoin revolutionary.

Bitcoin is censorship-resistant electronic cash. It's teleportable currency -
without a deplatforming option.

That's the innovation.

What Sweden is engaging in is a cargo cult. Build the blockchain runway,
hoping the planes will land. They won't because they have no reason to.

Censorship-resistant money is a direction no government will pursue
voluntarily. The reason is simple: censorship of transactions will be demanded
by a ruling class indent on "doing something" about drugs, terrorism, and
rogue states. Some governments may be forced to follow the censorship-
resistant direction by market forces, but that's probably far off from today.

~~~
volgar1x
Why is this getting downvoted?

~~~
newguy1234
Some people really don't like cryptocurrencies

~~~
volgar1x
Is it just pure hatred ? There don't seem to be much arguing going on...

~~~
bronipstid
My theory is that the nerds on here who spend too much time in the financial
fun house become imbibed with the ethos of it. It's really a sad end to a lot
of idealistic young hackers who give up on changing the world in order to
defend their fancy new stock portfolios. The joke is ultimately on them
however, as everyone who trusts wall street eventually gets taken to the
cleaners.

------
bitxbit
All these banks and financial institutions launching digital currencies miss
the whole point: FRICTIONLESS transactions. Right now you have layers upon
layers of network companies nickle and diming you. This is literally someone
taking a penny from everyone’s account except it is a lot more than that.
There’s absolutely no reason for Mastercard and Visa to even exist in 2020.
They’re sitting on top of some obsolete imaginary network collecting rent.

~~~
pjc50
The issuing banks provide credit and insurance, and quite a lot of effort in
the system goes to anti-fraud. Especially for online payments.

~~~
bitxbit
It used to be that way but with all the data available to us now, managing
fraud isn’t as difficult as it used to be. Definitely not to the tune of 3-4%
both ways combined in many cases.

~~~
pjc50
EU fees are capped at 0.2 per cent of the transaction value for debit cards
and at 0.3 per cent for credit cards. Americans presumably are getting ripped
off for the usual "free market" reasons.

(Not counting Amex cards, which take 3% off the merchant and hand most of it
back to the customer)

------
mongol
The blockchain technology that will be used in this pilot is apparently R3
Corda : [https://www.corda.net/](https://www.corda.net/)

------
Thorentis
Sorry if this is naive, but how is this different to electronic currency? The
whole difference between cryptocurrencies and electronic currency, is that
cryptos are decentralised and have a public ledger.

A CBDC (central bank digital currency) does not have a public ledger, and is
not distributed. If they are using a blockchain internally (an entirely
pointless concept done only for the addition of a buzzword to their webpage),
that doesn't make it a crypto in the currently known sense.

So I ask again: how is this different to digital/electronic currency that
already exists? I can open my bank app, check the funds, send them to another
person instantly. None of that involved paper, and all of it was backed and
controlled by the central bank. What makes this any different?

------
jariel
Since currency is de-facto already digitized, and everyone does everything
electronically, how the h is an e-currency different from what's already
there?

~~~
fierarul
I guess one advantage is that now every marketing company/institution can
analyze the entire flow of money within the country.

------
mikaeluman
The blockchain was not meant to solve the problem they are trying to solve.

We already have digital currency and it works quite well.

I really have no idea what they are doing.

~~~
dapuz
[https://xkcd.com/2267/](https://xkcd.com/2267/)

------
tpotanski
Big Data and banking - I think it's the best combination! And thta's also what
the author of this article thinks: [https://devsdata.com/big-data-financial-
services/](https://devsdata.com/big-data-financial-services/)

------
beatgammit
Why not something like GNU Taler[1]? It's a centralized digital currency with
privacy for the payer at its core, but payees are always identified (very
useful for taxation purposes). That sounds like exactly the use case for a
government entity that wants a digital cash replacement.

\- [1]
[https://en.m.wikipedia.org/wiki/GNU_Taler](https://en.m.wikipedia.org/wiki/GNU_Taler)

