Scalability and privacy concerns identified in the first phase of the e-krona pilot.
Sweden’s central bank, the Sveriges Riksbank, in a recent study presented the results of the pilot of its central bank digital currency project on a network based on R3’s Corda blockchain.
The results, published after the completion of the first phase of the e-krona development revealed that the Riksbank had identified some critical issues that must be addressed before the CBDC can be launched as a medium of transactions.
In its pilot, the central bank simulated the core aspects of a CBDC system from obtaining liquidity supply via the Riksbank’s settlement system and the RIX to demonstrate how network members can serve as e-kronor distributors. Riksbank also simulated participants, end-users and payment instruments like mobile apps.
The results of the simulation exposed the scalability of the CBDC as a major bottleneck for the project, the Sweden authorities explained, adding that the new CBDC technology requires further investigation before large-scale implementation can be possible.
“The solution tested in phase one of the e-krona pilot has met the performance requirements made in the public procurement. But this has taken place in a limited test environment and the new technology’s capacity to manage retail payments on a large scale needs to be investigated and tested further”, the report noted.
Another challenge being faced by the project is achieving privacy.“The Riksbank is currently analysing to what extent the information stored in the transaction history can be regarded as information covered by banking secrecy and whether it comprises personal data”, the bank stated.
The report further states that the information contained in an e-krona transaction must be protected to uphold Sweden banking secrecy laws and avoid revealing the personal data of users.
The head of Riksbank’s e-krona pilot division in Stockholm, Mithra Sundberg, pointed out that Sweden’s CBDC has a long way to go before it can be used by the public. Not only might the e-krona require a new legal framework but given the wide rand of issues that must be addressed before investing in full-fledged development, it is also possible that the Riksbank may continue its blockchain pilots until 2026.
Riksbank has confirmed that accounting giant Accenture will continue as the technical supplier for the e-krona testing. The second phase is expected to begin soon and will focus on including include potential distributors of the e-krona, CBDC performance in retail payments, as well as storage methods. It will also test the offline functionality of the CBDC.