Mark Zuckerberg‘s bid to revolutionize cash transactions with his global currency project wasn't (yet) a sweeping success story. The promise of one currency for all may entail a dramatic reduction in transaction costs for consumers, but also puts in question established structures of monetary policy and thus a central pillar of government's authority.

Libra as a Door Opener

But still: Libra prompted an upsurge in central bank research, with projects for central bank digital currency (CBDC) mushrooming and a greater sense of urgency: «The BIS and many central banks are now much more open toward the idea of central bank digital currency than they were before the announcement of Libra,» said Dirk Niepelt, an economics professor in Bern. «It doesn't mean that they are more in favor of the idea. But: the status quo is no alternative in the medium term.»

Niepelt should know. He is director at the Study Center Gerzensee, der Swiss National Bank's academy. The bank (SNB) has upped the pace of its own research in 2019 and agreed to develop a project on digital central bank money in an innovation-hub together with the Bank for International Settlement (BIS).

A Service to the Financial Market

The Swiss monetary authority is but one of a long list of central banks to study digital money. The projects pursued by the banks in poorer countries are fundamentally different to the one launched by the SNB.

In developed countries such as Switzerland, digital solutions are primarily sought to make transactions on the financial market more secure, swifter and cheaper. Authorities in poorer countries meanwhile hope to broaden the access to financial services to the entire population, to people who so far have excluded from such business.

From the E-Peso to the E-Krona

Here's a list of central banks with strong projects for digital central bank currencies – a list that is far from complete, given the fast development of the technology. Countries omitted from the list with known projects for e-currencies include Tunisia and South Africa to name but two.

1. Sweden

 Stockholm (Picture: Shutterstock)

Sweden's central bank (Riksbanken) has studied the issue of digital money for quite some time, urged on by its chief, Stefan Ingves. Cash has been on the retreat for years and is almost out of use in parts of society. The central bank is establishing how this will affect its role.

After two initial project phases, Riksbanken is now working on the technical implementation of an e-krona. It intends to cooperate with the consultancy firm Accenture. Ingves has also urged parliament to take a firm interest in the project in a bid to make it more broadly accepted by society.

Niepelt, who worked as a researcher and professor in Sweden for many years, says that Riksbanken may eventually take the lead by introducing a digital central bank currency.