Sweden’s Central Bank Plans to Host Digital Currency Innovation Hub

Sweden's Central Bank Plans to Host Digital Currency Innovation Hub

Sweden’s central bank asks the Bank for Foreign Settlements (BIS) to host the digital currency innovation hub.

The Riksbank began developing its central digital currency bank (CBDC) last month.

In order for the hub to be located in Sweden, the lender needs to take some steps to co-finance the operation, the central bank said.

Accordingly, the Riksbank has proposed amending the Sveriges Riksbank Act, asking the Swedish Parliament to allow funding the activities of foreign organizations.

In addition, the central bank has asked approval from the Parliament to co-finance these activities for a term of five years and at a maximum cost of 30 million Swedish kronas ($3.1 million) a year if the BIS plans to establish a hub in Sweden.

Hub allows improvement of global payment

In 2019, the BIS has developed the BIS Innovation Hub to allow global central banks to improve the global payment and financial infrastructure.

As stated by Cointelegraph, Switzerland has been actively studying CBDCs and distributed ledger technology in the hub.

Sweden’s decision to set up a BIS innovation center comes in line with the country’s growing digitization of financial systems and the gradual reduction in the use of cash, the central bank said.

Testing CBDC

Late last month, Cryptolydian reported that the Riksbank would increase knowledge of CBDCs by testing the digital currency in a series of scenarios and stress tests.

Accordingly, the CBDC pilot will be based on distributed ledger technology (DLT) in an isolated test environment. This will help the central bank to increase its knowledge on the project.

The central bank added that the project is mainly for research, as no decision has been taken on issuing the currency.

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