Swedish central bank acknowledges benefits of cryptocurrencies

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Swedish central bank acknowledges benefits of cryptocurrencies

(CoinDesk) Sveriges Riksbank, Sweden’s central bank, has published a brief
economic commentary on the impact of digital currencies on the retail
payments market.
The document outlines the basics behind digital
currencies and focuses on bitcoin, but it also mentions some altcoins
such as litecoin and dogecoin.
Aside from a relatively basic introduction to digital currencies and background information for novices, the document also sheds light on the state of bitcoin in Sweden and the bank’s attitude towards bitcoin and other cryptocurrencies.

Take-up remains limited

The Sveriges Riksbank
report found that the use of digital currencies in Sweden remains very
limited. The authors point out that it is particularly difficult to
obtain accurate information on the use of digital currencies in
different countries, hence most analyses are usually limited to the
total issue value and global usage.
The report tries to isolate
Sweden and examine transactions limited to Swedish krona (SEK)
exchanges. Even so, the data may not be complete, as it only deals with
transactions involving SEK.
“On average, around 212 bitcoins per
day were converted to or from SEK during the period December 2012 to May
2014 at an average value of just over SEK 266,000. However, the daily
value varied substantially, between SEK 2,500 and SEK 2.5 million,
depending on the exchange rate and the number of bitcoins exchanged,”
the report notes.
The authors caution that the statistics are
incomplete, as there is no data on transactions between private persons
and other movements of funds that could be relevant. Therefore, they
concede, the exchange statistics may underestimate the use of bitcoin in
However, the report concludes that the values involved in
cryptocurrency transactions pale in comparison to traditional
transactions. This is how bitcoin stacks up:

make daily payments using cards and cash totalling 8 million in volume
and to a total value of over SEK 3 billion. Even if the use of bitcoin
in Sweden were to be much larger than the average exchange value of just
over SEK 266,000, this is a relatively low value in relation to other
types of payment. At present, there only seem to be around 25 swedish
companies accepting Bitcoin.”

Risky but innovative

the report contains the usual set of caveats found in most central bank
statements involving digital currencies, it also includes some
relatively positive commentary.
The report states that digital
currencies are one of many innovations in the Swedish payments market
and like other innovations, digital currency is essentially positive:

can contribute to meeting new payment needs and to making payments
cheaper and more secure. Those who choose to use a particular payment
service can be expected to do so because it gives them an added value in
relation to other payment services. This also applies to virtual
currencies, which can for instance make some cross-border payments
simpler, faster and cheaper. Another advantage is if the payer does not
need to share sensitive information, such as card number or bank account
number, with the payee.”

Cryptocurrencies may also be better suited for micropayments made via websites, the report further notes.
associated with digital currency platforms include lack of clear
regulation, lack of consumer protection regulation, volatility, security
risks and the risk of using digital currencies for illicit
The report concludes that the impact of any
innovation depends on how much it is used. The use of digital currencies
is “very limited” both in terms of the number of users, the number of
transactions and the value involved in said transactions.
Therefore both the positive and negative effects of digital currencies on the payment market in Sweden are currently negligible.

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