Crypto Frontline

Sweden’s central bank had impressed in February, when it began testing a central bank digital currency (CBDC), in what would be a pilot program that will last until February 2021. It became the second country, after the Bahamas to start such an innovative project and now the institution wants to move deeper into the digital currency space, by wanting to an innovation hub by the Bank for International Settlements (BIS).

Will the hub be located in Sweden?

Riksbank had announced on its website back on March 6^th, the willingness to see BIS establishing a northern European innovation hub in Sweden, but at the same time, made it clear that proper financing will be required:

The Riksbank wishes to see BIS establish a northern European innovation hub in Sweden. But to enable the hub to be located in Sweden, the Riksbank needs to undertake to co-finance its activities. The Riksbank is therefore proposing an amendment to the Sveriges Riksbank Act, so that the Riksbank, after approval from the Riksdag (the Swedish Parliament), may finance the activities of international organisations, if these are connected to the Riksbank’s activities.

According to Cointelegraph, the central bank had requested the parliament for approval in order to be able to co-finance for five years such activities, with a maximum of $3.1 million per year. BIS had already chosen some locations for the Innovation Hub and some of those include countries like Switzerland, Singapore, or Hong Kong.

What is the BIS Innovation Hub?

We must start by mentioning the main mandate of the BIS Innovation Hub is to identify and develop in-depth insights into new trends in financial technologies relevant to central banks. The project wants to explore developments of public goods to enhance how the global financial system can work.

Some of the topics that will be under consideration are related to central bank digital currencies, payment innovations, global stablecoins, and the digitalization of trade finance. Fully aware of the growing trend towards financial digitalization, BIS wants to help the industry adapt to changes that will very likely occur in the not-too-distant future.

It’s good to see the blockchain technology and the idea of digital currency are gaining traction among central bankers. Unfortunately, there is no shown interest in traditional cryptocurrencies like Bitcoin, Ether, or Litecoin. Volatility and regulation are two of the main issues, and the main goal of the Innovation Hub is to provide better alternatives to the current financial system.