Researchers warn of e-krona

Published 6 December 2024 at 09.25

Economy. In order to face competition from cryptocurrencies, several central banks are considering launching their own digital currencies, including a Swedish “e-krona”. But Thomas Marmefelt, associate professor of economics, warns that these currencies could lead to increased government control and pose democratic risks.

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– Digital central bank currencies could be a practical tool for authoritarian political leaders, but also for state top management with democratic leaders, says Thomas Marmefelt.

The development of digital currencies took off after Facebook unveiled its stablecoin Libra and China began the development of a digital yuan. The central banks became anxious to regain control of the monetary system, where private actors have dominated through cryptocurrencies such as bitcoin and stablecoins.

However, Marmefelt sees major challenges. Digital central bank currencies can “crowd out” commercial banks, which today create the majority of money in society through credit.

A digital currency directly with central banks would also give the state full transparency of all transactions, which can be combined with other monitoring systems. Today, the banks manage such monitoring for the state via the Money Laundering Act.

– Sweden does not need an e-krona. We are already close to a cashless society with solutions like Swish, says Marmefelt.

He also points out that this development can create a system where the state gets significantly more power, something that risks benefiting those who rule at the expense of those who are governed.

According to Marmefelt, a digital currency can be good for the central banks but not necessarily for the citizens.