The Krona(Crown) is well known and is the Swedish currency. The e-krona( e-crown) on the other hand is a digitized Krona based on Blockchain technology.
This project by the Swedish government to develop the e-krona shows Sweden’s acceptance of the novel cryptographic technology.
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Sweden embraces technology and as the world progresses, Sweden has taken a seat at the forefront.
Below are some reasons as to why the E-krona is rising in Sweden.
- Governmental Enthusiasm and Support
The e-krona digital project was initiated by the Swedish government and their central bank, Sveriges Riksbank, back in 2017.
It is an attempt to introduce the wonders of blockchain technology to the Swiss economic system through the creation of a national digital currency.
By doing so, Sweden aims to accelerate its plans to become the world’s first cashless society by March 2023.
Even though Sveriges Riksbank claims are to make Sweden a cashless society, for now, the e-Krona token is not an attempt to replace the physical Swedish Krona but rather a new form of payment to be in competition with the emerging decentralized cryptocurrencies.
Sweden for the longest time has been known for being open to innovations and embracing positive changes whenever necessary.
Because of that, Sweden first issued banknotes in 1661, but it desires to become the first country to stop using them.
This will manifest if Sweden successfully becomes a cashless society by March 2023.
- Wide Receivership by Swedish Companies
Swedish companies have always traded with the Krona. The krona tends to correlate particularly well with the stock index.
True to form, the Swedish currency has risen in the last few weeks becoming so conspicuous even on the S&P 500 ( Standard and Poor’s 500, a USA based stock market index)
The S&P was up 7 percent at the beginning of June at 1,401 when European trading closed on Thursday.
Over the same period, the krona was 8 percent higher against both the greenback and the European single currency, with rates at the European close of 6.7 kronor to the dollar and 8.2 to the euro.
The e-Krona pilot scheme started in 2020 and has been in the works ever since. The Riksbank aims to finish phase 1 by the end of 2021.
The companies are so eager to try this new Swedish e-krona on the stock market now that the Krona is already soaring high against the euro and other currencies.
Since the companies have as a norm contributed to the strength of the Krona as a currency, it is with no doubt that they will support the e-krona as well when it is finally out.
Even in the e-krona creation stages one of the private companies offered a hand to the Riksbank. The Riksbank needed to simulate the e-krona in an isolated test environment and a private company offered its blockchain technology for that particular purpose.
All through the process and development of the e-krona, private companies are key players. It is a perfect public-private partnership.
- The E-Krona Complements the Swedish Krona as a Currency.
The Riksbank has a relaxed attitude towards the e-krona, something crucial to its firmness.
The minutes of its latest monetary policy meeting in July show the krona’s value low on the list of items the central bank is fretting over.
This is in sharp contrast to Switzerland, where the central bank has aggressively resisted currency appreciation.
In a recent note, Nomura (a financial services group) suggested that the e-krona was likely to find long-term support because the central bank seemed “ relatively content with SEK [Swedish krona] strength.”
The idea that Sweden plans to issue its digital currency is not so far-fetched. Research shows that one-fifth of the world’s population is likely to issue its digital currency in three years. Guess Sweden is part of that one-fifth.
If anything, the e-krona will make the Krona stronger.