Before a technological concept is introduced to the wider public, it is common for it to first undergo beta testing to iron out any deficiencies that may not be immediately obvious to the developers. An example of this in the UK is the latest instalment of the Football Manager franchise. Every year the maker Sports Interactive issues a beta version which players painstakingly test prior to the official release of the game. After feedback is analysed and acted upon, the aim then is for a smooth launch of the finished product.
Whilst on a much grander scale, beta testing will serve as an equally important aspect in how central banks plan to successfully implement their own variants of digital currency.
In one of my recent articles I discussed an appearance by Federal Reserve board member Lael Brainard at an event held in Washington D.C. called, ‘The Future of Money in the Digital Age‘. Present also at this event was the Governor of Sweden’s central bank (the Sveriges Riksbank) Stefan Ingves. During a panel discussion, Ingves laid out a six step criteria for the introduction of central bank digital currency. Before expanding on Sweden’s specific role pertaining to CBDC’s, here is a summary of the six steps in question:
- Large value and retail payments must be settled in central bank money anywhere around the world – in real time – 24 hours a day
- Cross currency and cross border payments must also be settled in central bank money under the same conditions
- A re-definition of what constitutes legal tender in the digital age
- A digital currency issued directly by the central bank and certified as legal tender
- Government sponsored digital identification as part of new regulations and a reinforcement of financial inclusion
- A requirement for physical money and a system to distribute banknotes in the event that the digital network goes down, to be under the control of the central bank
Out of all the six steps, number five is perhaps the most ambiguous. What it refers to is something Bank of England governor Mark Carney discussed in a speech at Mansion House in London last year. As part of the BOE’s objective to reform the UK’s RTGS payments system, they have been looking to utilise what is known as the ‘Legal Entity Identifier.’ This would mean that every transaction undertaken within the renewed RTGS could be traced back directly to each participating individual. This is significant not just in terms of privacy, but also because as Victoria Cleland of the BOE has mentioned, the vast majority of consumers are completely dependent on RTGS. If implemented, the LEI would, according to Carney, be a format that ‘defines international best practice‘. Central banks hope to deflect concerns over LEI by claiming it will combat terrorist financing and prevent money laundering. In reality it has more to do with depriving consumers of any last vestiges of anonymity.
A good starting point for appreciating the significance of Ingves’ vision is to look at the Riksbank’s commentary on digital currency. Exactly one year ago Ingves gave a speech that outlined the central banks’ ‘e-krona‘ project. Since 2017 the Riksbank have been engaged in an extensive research programme on the potential for issuing a digital version of its Krona currency that would eventually supersede physical money.
Ingves confirmed that the bank is building a pilot version of e-krona. There are two possible models for how it could be introduced. The first is through e-kronas held in an account at the Riksbank, with the second allowing the general public to hold money with the central bank through digital tokens stored on a bank card or mobile app. What the two have in common is that no matter which option was implemented, both would see the public’s money held directly at the Riksbank.
As many readers will already be aware of, physical cash is classified as central bank money. The digital variant of banknotes, for example debit cards, is commercial bank money. Put simply, the private bank you and I hold accounts with have the authority to hold our money electronically and allow us at any time to convert it back into cash e.g. central bank money. Judging by what the Riksbank have said, an e-krona currency could allow individuals to hold electronic money with the central bank, bypassing the traditional commercial banking system.
As for why Sweden in particular are spearheading the digital currency movement
in Europe, one reason is that according to several news sources, a spate of high profile robberies after the year 2000 served to change people’s perception of cash for the worse. A growing number of businesses have ever since been seeking to abandon cash in favour of digital only payments. Even Swedish unions have been campaigning for cash free workplaces, on the grounds of protecting their members.
Aside from this, Sweden’s small population of ten million is looked upon as a pioneer of digital technology within the field of payments. In a survey conducted by the Riksbank in 2018, just 13% said they paid for their most recent purchase using cash. In 2010 that figure was 39%. Cash is no longer accepted in a growing swathe of restaurants and shops, and cannot be used to park your car or pay taxi and bus fares. These circumstances have provided Riksbank governor Ingves with the ammunition to declare that Sweden must now prepare for an all digital payment future.
This is where point three of Ingves’ six step plan comes into focus. With banknotes in rapid decline, the Riksbank is stressing the need to review the Sveriges Riksbank Act that governs their control of the money supply. Chapter five of the act states that banknotes and coins issued by the Riksbank are legal tender. But there are no provisions within the act to accommodate an e-krona, which is why Ingves wants the country’s legal tender legislation re-evaluated.
In April this year the Riksbank proposed a review of the concept of legal tender, arguing that within the near future cash usage could become almost non-existent and leave a void in terms of who has jurisdiction over the issuance of money:
The general public no longer having access to any form of central bank money can make it more difficult for the Riksbank to promote a safe and efficient payment system in Sweden, not just in times of crisis and war but also in peacetime. The Riksbank has previously expressed concern over this development and has therefore analysed the scope for introducing a Central Bank Digital Currency (CBDC).
What the Riksbank want, in their own words, is a review of ‘the state’s role with regard to means of payment in a digitalised economy and the role and responsibility of both the state and the private sector on the payment market.’ This is very similar language to what has been emanating from the Bank of England and the Federal Reserve – a collaborative approach whereby the state and private sector work hand in hand. It is why these same central banks are now in the process of reforming their payment systems to be compatible with the technology being developed by private firms.
In the spring of 2019 the Riksbank made it known that they had begun the process of procuring suppliers for the development of an e-krona. By 2020 they hope to be in a position where a technical platform for e-krona payments can be developed and tested.
Through their communications the bank have attempted to present e-krona as a means of guaranteeing that the Swedish public would continue to have access to state issued money in the absence of cash. They caution that by not pressing ahead with it, the population would be left to depend on private payment alternatives, which in turn would hinder the Riksbank’s ability of promoting a ‘safe and efficient payment system.’
They have yet to release a pilot of e-krona, but Ingves has raised the prospect that such a currency could conceivably connect to the ECB’s 24/7 TIPS payment network. As with all globalist objectives, Ingves believes that it is necessary to begin progress towards an e-krona ‘with small steps forward and to learn along the way.’ This is no surprise given that gradualism is the preferred model for global planners.
To remain at the forefront of the global monetary system, it stands to reason that central banks will over the medium to long term adopt digital currencies. What many in the independent media fail to recognise is that their apparent hostility to entities such as Bitcoin and Facebook’s Libra project is not indicative of hostility towards digital money. They openly want to digitise all capital, but also want to retain jurisdiction over how it is supplied.
As with other central banks, the Riksbank aim is to work in conjunction with private payment providers, not against them. They propose this within a report published in October 2018, ‘The Riksbank’s e-krona project – Report 2‘:
For it to be practically possible to use e‐krona for online purchases or in physical shops, the e‐krona platform, which contains the underlying register for e‐krona, needs to interact with a number of other systems and agents. Banks and other companies, for example, need to be able to join the e‐krona platform in order to be able to develop and offer payment services to households and companies.
Within this report the importance of being able to ‘record transactions and safeguard who is the rightful owner of the digital krona’ is also raised. The Riksbank make it quite plain that all digital transactions with e-krona would need to be traceable, and from their perspective this is where the focus should be during development.
Going by one of Governor Ingves’ most recent publications – ‘How to ensure the future of the Swedish krona‘ – if an e-krona becomes a reality, the Riksbank are not going to abolish cash overnight. It will be far more subtle than that. Instead they are pledging that citizens will have access to state money in both physical and digital form, and be able to choose either as a means of payment. They expect that once an e-krona becomes part of people’s everyday existence, they will gravitate further away from cash until it eventually disappears from circulation. This way it looks to the wider world like the natural evolution of money rather than a premeditated plan to make the tangible intangible.
But something else to consider is how Ingves frames the necessity for an e-krona. He stated that ‘it is time to act to secure the future of the Swedish krona.’ A narrative I have picked up on over the past year is that if central banks do not develop cash alternatives soon and governments fail to define what constitutes legal tender in the digital age, it could leave the financial system prone to a widespread currency crisis. Particularly with the expansion of cryptocurrencies, stablecoins and the prospect of Facebook’s Libra. The current crop of fiat currencies – led by the dollar’s role as world reserve – could therefore be in jeopardy. Through the eyes of globalists this would be fertile ground for moving the cashless agenda forward to the concept of a global currency framework, led by the linchpins of the system the BIS and the IMF.
Sweden is a template for where internationalists want to take the world in a monetary sense. As the digital currency agenda widens, do not be surprised if fiat currencies in their present guise become more unstable and susceptible to major fluctuations in value. The onset of crises have been shown over the centuries to be an opening for globalists to advance their goals for a ‘new world order‘. Be in no doubt that digital currencies are a vital cog in that ambition.