Stephanie Douse 
The Swedish Central Bank has announced its plans to test how new e-krona could stimulate smart payments, ‘which some believe are the future of money.
The Riksbank declared tests to merge state-backed digital money into traditional banking systems success in a study released on Wednesday but said it was still looking into claims of the promised benefits the new technology could offer.
The capacity to program or manage transfers – such as triggering a payment when a contract is met or granting pocket money that can’t be spent on sweets – has been mentioned as a potential benefit of central bank digital currency (CBDC), but Swedish officials want to go deeper.
“Concepts such as programmable money, smart money, and smart payments are often said to be the future of payments, and this is used as an argument in favor of the new technology,” the central bank said in the report.
Though no decision has yet been taken about the design or issuance of an e-krona, in the next phase, “we want to test and explore how such solutions can be used to create new payment services, and why they would be more effective than more traditional technologies,” the central bank said.
The test has deemed an experiment to integrate current intermediaries like banks to distribute CBDCs to average individuals “successful,” as well as off-line alternatives that allow the asset to be held locally on a person’s phone.
Sweden, which is a member of the EU but does not use the euro currency, is considering whether to enable offline payments, which could help with privacy but also carry the same hazards as cash, such as theft or the use of funds for illegal reasons.
Because the e-pilot krona’s version verifies tokens using transaction history, more data is exchanged among participants than would typically be the case, putting the project at risk of violating strict privacy laws like the EU’s General Data Protection Regulation (GDPR).
“Consultation with both the Swedish and the European Data Protection Authorities may be necessary to clarify how a solution based on DLT/blockchain technology relates to data protection regulations,” the report said.
That relates to an ongoing debate on whether crypto-style blockchain technology would aid or hinder user confidentiality.
Blockchain “might ultimately be the only solution left, in terms of being able to embed privacy by design” into a potential new digital euro, Marina Niforos, Affiliate Professor at HEC Paris, told CoinDesk. Cryptographic mechanisms are potentially able to ensure that data is only accessed by those who need to see it, she added.
This is in relation to the continuing argument over whether crypto-style blockchain technology would help or hurt consumer privacy.
However, Hyun Song Shin of the Bank for International Settlements warned in a webinar on Wednesday that blockchain might lead to a free-for-all of payment data.
In systems that use people’s real names, “we cannot use blockchains as in cryptocurrencies, because we don’t want to post all the transactions in a public way so that everyone can see what transaction someone has made with whomever,” Shin said.