The Central Bank of Sweden is waiting for the approval of the Swedish Parliament as well as the Bank for International Settlements (BIS) to host the Centre for Innovation to study state cryptov currencies.
The Bank of Sweden has published an application to host the BIS Centre for Innovation. The new initiative aims to develop an understanding of critical technology trends affecting central banks and to serve as a focal point for a network of central bank innovation experts.
One of the Centre's areas of research is public cryptov currencies. Last month, the Bank of Sweden announced the start of testing its own digital currency, so the authors of the application believe that the country's Central Bank has "a comparative advantage over other central banks" on the issue of placing the Centre of Innovation.
The Center for Innovation of the Bank for International Settlements is not an ordinary non-governmental organization, but a "branch" of BIS, whose employees and activities are protected from local prosecution. The application from the Central Bank of Sweden states:
"Given the fact that the Bank of Sweden has already come a long way in the analysis of government cryptocurrencies, it can, as required by BIS from the Center for Innovation, quickly provide analysis based on the already established cooperation between the public and private sectors, scientists and other central banks.
Many central banks are studying the concept of issuing their own cryptovalues, but the Bank of Sweden has won the palm of the primacy in this area. The Central Bank began studying the possibilities of state cryptovalues back in 2017, due to the rapid transition of the country's citizens from the use of physical money to non-cash payments.
Over the years, the Central Bank has made significant progress, which allowed it to start testing Sweden's state cryptovalue, the electronic krone, in February. The Bank of Sweden believes that, thanks to its knowledge base, it is a strong contender for the placement of the Center for Innovation, and asks the Swedish Parliament and BIS to agree to it.
BIS Innovation Centre
As noted in the application, the work of the Center for Innovation needs to be funded. The Bank of Sweden asks the Parliament to allocate SEK 30 million ($3 203 500) per year for the five years of the Centre's operation, which is about half the annual dividend of the Swedish Central Bank on BIS shares. The Bank of Sweden controls 3.2% of BIS shares.
However, the Central Bank of Sweden considers this to be a profitable investment. Citizens of Sweden continue to give up cash, regardless of whether the Center for Innovation will appear in the country, and "there will still be a need to analyze the development of financial technologies in the payment market".
The struggle for placement of the Center for Innovation is taking place at a difficult time for BIS and central banks in general. At the beginning of the month BIS expressed confidence that the payment world is changing rapidly and published a report on P2P payments, token shares and state crypt currencies.
The BIS report said that the private initiatives of the steleholders pose a potential threat to central bank influence on monetary policy and financial stability. BIS researchers stressed the need for a global response to the Libra initiative.
In recent months, central banks have repeatedly raised the issue of government cryptov currencies. In January, six Central Banks together with BIS created a group to study state cryptov currencies, and in April the central bank group and BIS will discuss the possibility of their release.
The Central Bank of Sweden is waiting for the approval of the Swedish Parliament as well as the Bank for International Settlements (BIS) to host the Centre for Innovation to study state cryptov currencies.
The Bank of Sweden has published an application to host the BIS Centre for Innovation. The new initiative aims to develop an understanding of critical technology trends affecting central banks and to serve as a focal point for a network of central bank innovation experts.
One of the Centre's areas of research is public cryptov currencies. Last month, the Bank of Sweden announced the start of testing its own digital currency, so the authors of the application believe that the country's Central Bank has "a comparative advantage over other central banks" on the issue of placing the Centre of Innovation.
The Center for Innovation of the Bank for International Settlements is not an ordinary non-governmental organization, but a "branch" of BIS, whose employees and activities are protected from local prosecution. The application from the Central Bank of Sweden states:
"Given the fact that the Bank of Sweden has already come a long way in the analysis of government cryptocurrencies, it can, as required by BIS from the Center for Innovation, quickly provide analysis based on the already established cooperation between the public and private sectors, scientists and other central banks.
Many central banks are studying the concept of issuing their own cryptovalues, but the Bank of Sweden has won the palm of the primacy in this area. The Central Bank began studying the possibilities of state cryptovalues back in 2017, due to the rapid transition of the country's citizens from the use of physical money to non-cash payments.
Over the years, the Central Bank has made significant progress, which allowed it to start testing Sweden's state cryptovalue, the electronic krone, in February. The Bank of Sweden believes that, thanks to its knowledge base, it is a strong contender for the placement of the Center for Innovation, and asks the Swedish Parliament and BIS to agree to it.
BIS Innovation Centre
As noted in the application, the work of the Center for Innovation needs to be funded. The Bank of Sweden asks the Parliament to allocate SEK 30 million ($3 203 500) per year for the five years of the Centre's operation, which is about half the annual dividend of the Swedish Central Bank on BIS shares. The Bank of Sweden controls 3.2% of BIS shares.
However, the Central Bank of Sweden considers this to be a profitable investment. Citizens of Sweden continue to give up cash, regardless of whether the Center for Innovation will appear in the country, and "there will still be a need to analyze the development of financial technologies in the payment market".
The struggle for placement of the Center for Innovation is taking place at a difficult time for BIS and central banks in general. At the beginning of the month BIS expressed confidence that the payment world is changing rapidly and published a report on P2P payments, token shares and state crypt currencies.
The BIS report said that the private initiatives of the steleholders pose a potential threat to central bank influence on monetary policy and financial stability. BIS researchers stressed the need for a global response to the Libra initiative.
In recent months, central banks have repeatedly raised the issue of government cryptov currencies. In January, six Central Banks together with BIS created a group to study state cryptov currencies, and in April the central bank group and BIS will discuss the possibility of their release.
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