Sweden pushes digital krona legislation as ECB plans 2027 euro pilot

Sweden’s central bank has urged lawmakers to prepare legislation for a digital krona as the European Central Bank moves closer to testing its own digital currency and foreign stablecoins raise concerns about the Swedish currency’s future use.

The Riksbank, in an Oct. 7 letter to parliament’s Finance Committee published on Oct. 15, said Sweden should begin examining the legal changes needed for a potential central bank digital currency (CBDC), even though no decision has been made to introduce one.

Officials estimate that developing and introducing the digital krona would take at least five years, with legislative changes requiring additional time.

The recommendation follows a 2023 government inquiry that found insufficient public need for a state-issued digital currency. Since then, progress on the digital euro and the growing use of stablecoins have prompted the central bank to reconsider Sweden’s position.

Digital krona could take at least five years to introduce

Under the proposal, Swedish lawmakers would first examine the legislation needed to allow the Riksbank to issue a digital version of the national currency.

The bank said developing the necessary systems, preparing financial institutions and introducing the currency would require at least five years. Any changes to existing laws would take additional time, making early preparations necessary.

In March 2026, the Riksbank had already recommended a government inquiry into the legal requirements for an e-krona, the name previously used for the digital krona project.

Its earlier recommendation proposed starting the inquiry once European Union legislation for the digital euro had been finalized and the ECB had decided to issue the currency.

The October letter has brought the issue back before lawmakers, with the central bank seeking legal preparations before Sweden makes a final decision on launching a CBDC.

Sweden has previously carried out several years of research into digital central bank money.

Between 2017 and 2023, the Riksbank studied technical, economic and legal questions surrounding the e-krona. Its technical pilot work ended in 2023, after which the institution continued monitoring international CBDC developments.

The government inquiry published that year concluded that Sweden did not have sufficient reason to introduce a digital krona at the time, although it acknowledged that future developments could change the assessment.

According to the Riksbank, a digital krona would give people another way to hold and use state-issued money alongside physical cash. Unlike digital balances held at commercial banks, the proposed currency would represent a direct liability of the central bank.

The institution has maintained that such a currency would complement banknotes and coins, not replace them.

ECB’s digital euro plans have renewed concerns over competitiveness

One of the main reasons cited in the October letter was the ECB’s progress toward introducing a digital euro.

The European central bank plans to begin a 12-month pilot during the second half of 2027 and is working toward possible issuance in 2029, subject to the necessary legal approvals.

As crypto.news reported in September, the ECB invited merchants to participate in the pilot across the euro area.

The testing program will involve 19 national central banks and 36 banks and payment firms, covering online purchases, physical stores, mobile payments and transfers between individuals.

Participants will use a trial version of the currency that will not have legal tender status. The ECB intends to use the results to examine how the proposed system would operate before making a final issuance decision.

Sweden is an EU member but does not use the euro, leaving the Riksbank responsible for maintaining the Swedish krona as its national currency.

According to the Swedish central bank, a digital euro could offer payment services that become more attractive to consumers and businesses, potentially weakening the competitiveness of krona-based payment systems.

Its March 2026 payments report examined whether a future digital krona could operate using the same technical platform as the digital euro through an agreement with the ECB.

The report identified potential cost savings and improved compatibility between Swedish and euro-area payments. Access to the digital euro’s planned offline payment functions was another possibility discussed by the institution.

Legislative work in Europe has progressed during 2026.

In June, the European Parliament’s Economic and Monetary Affairs Committee advanced the digital euro framework through its approval of a negotiating position on the proposed legislation.

The draft included provisions for offline payments, transaction privacy and limits on how much digital euro an individual could hold.

Lawmakers proposed using zero-knowledge technology to verify certain transactions without disclosing personal information. The framework contained restrictions on interest payments and provisions governing how businesses could receive and hold digital euros.

The European Parliament subsequently approved its negotiating position in July, allowing talks with the Council to proceed.

The ECB’s eventual issuance decision will still depend on the completion of the EU legislative process and a separate decision by its Governing Council.

Foreign stablecoins could put pressure on krona payments

Beyond the digital euro, the Riksbank identified growing interest in foreign-currency stablecoins as another potential challenge for Sweden.

The October letter singled out digital tokens linked to the US dollar, warning that their adoption for everyday transactions could eventually affect the domestic use of the Swedish krona.

The bank said the immediate risk remained limited, although it cautioned that foreign-currency tokens could become more attractive as payment services develop.

“If stablecoins pegged to foreign currencies are considered attractive as a means of payment,” the letter stated, use of the Swedish krona could face pressure even domestically.

Similar concerns have been raised by European monetary officials.

In June, ECB Executive Board member Isabel Schnabel warned about dollar stablecoins during a speech at the Bank of Korea International Conference.

Schnabel said the global stablecoin market was approaching $300 billion at the time, with Tether’s USDT and Circle’s USDC accounting for roughly 90% of its value.

She argued that the dominance of dollar-denominated tokens could reinforce the international role of the US currency, while stablecoins linked to European currencies remained comparatively small.

The ECB official expressed concerns about financial stability and the possibility of stablecoin issuers facing redemption demands when confidence in their underlying reserves weakens.

In its own March payments report, the Riksbank acknowledged that stablecoins could make payments more efficient but warned of risks associated with their private issuers and reserve arrangements.

The institution explained that stablecoin holders depend on the issuer’s ability to redeem tokens at their stated value. Maintaining sufficient liquid reserves is therefore necessary for the payment instrument to operate as intended.

Sweden already has a privately issued krona stablecoin

The Swedish market has witnessed developments involving digital versions of its national currency outside the central bank’s CBDC project.

In June 2026, Frankfurt-based AllUnity launched its Swedish krona stablecoin SEKAU under the European Union’s Markets in Crypto-Assets Regulation.

AllUnity, a joint venture backed by DWS, Flow Traders and Galaxy Digital, introduced the token as a regulated electronic money token backed by Swedish krona reserves at a 1:1 ratio.

The company said SEKAU was designed for institutional settlement, cross-border payments, treasury operations and digital asset transactions.

At launch, the stablecoin was made available on Ethereum, Solana, Base, Tempo and Polygon, giving institutional customers access to a krona-denominated asset across several blockchain networks.

AllUnity said the token was backed by segregated fiat reserves, with holders entitled to redemption at par value under the applicable regulatory framework.

SEKAU operates as privately issued digital money, separate from the central bank’s proposed digital krona.

Under the company’s arrangements, Banking Circle serves as the designated reserve and transaction bank, while Marginalen Bank provides banking support.

Trust Anchor Group supplies digital asset infrastructure and integration services.

According to AllUnity’s June announcement, onboarded institutional customers can mint and redeem SEKAU through its Business Mint Account, while work to make the token available through centralized and decentralized trading venues was underway.