In the aftermath of the ECB halting production of the €500 banknote, and more recently, India phasing out its highest denomination bills instantly eliminating some 86% of the cash in circulation as increasingly more countries make a move toward a cash-free society, another central bank – the world’s oldest – has started planning its own transition away from paper cash.
Sweden’s Riksbank, which was the first central bank in the world to issue paper currency in the 1660s, is preparing to become a monetary pioneer yet again, and has launched a project to examine what a central bank-backed digital currency would look like and what challenges it would pose.
As Reuters writes, the RIksbank could become the first major central bank in the world to create its own virtual money as the use of cash declines, Deputy Governor Cecilia Skingsley said on Wednesday.
The central bank hopes to take a decision on whether to start issuing what it calls an ekrona in the next two years. What is perhaps more notable is that should the central bank launch a digital currency few would notice; the value of cash in circulation in Sweden has fallen to around 1.5% of GDP from 10% of GDP in 1950.
Sweden is already mostly a non-cash nation: just like Citi in Australia, local bank branches are moving away from cash handling while cash machines are scarce in much of the country. Some shops have stopped accepting cash payments altogether. The Riksbank, like other central banks, already provides electronic money through accounts to banks and clearing organisations. But it only provides central bank money to individuals through notes and coins.
Digital currency functions like payment cards, allowing users to make online transactions across borders instantaneously. It has been growing in popularity as more people use the internet to shop. The major difference between digital and paper currency is that every single transaction is logged, and the value of money can be remotely “adjusted”, making it impossible to use cash as an value-preserving alternative to negative interest rates. It is also the reason why central bankers loathe cash in a time of negative interest rates.
“Sweden is on the forefront of this. We don’t have any other countries to copy, since there is no other country that is so rapidly stopping using notes and coins as Sweden is,” said Skingsley, who gave a speech on the issue on Wednesday.
Defending the move to transition away from cash, the central banker told reporters that “there is a large number of people who for various reasons cannot, do not want to have or do not get access to the commercial banks’ payment methods.” She did not explain, however, that the Swedish population would essentially have ceded full control of their “cash” to the central bank.
“We need to do the homework because it’s not an option for the public sector to stay on the sidelines and see the private sector cut off access to central bank money for individuals,” added Skingsley.
Meanwhile, the hyperbole continued: “this is as revolutionary as the paper note 300 years ago. What does it mean for monetary policy and financial stability? How do we design this: a rechargeable card, an app or another way?” Cecilia Skingsley, deputy governor at the Riksbank, told the Financial Times.
As the FT adds, there are considerable questions for Sweden’s central bank to answer about how a digital currency would work. Would individuals have an account at the Riksbank? Would transactions be traceable, unlike with cash? Would emoney earn interest? Ms Skingsley said: “Personally I would like to design it in a way that is most like notes and coins.” That would mean no interest would be paid on it. But she added that the state had no interest in helping illegal activity, suggesting some form of traceability.
Skingsley also said that the Riksbank would need to consider financial stability issues like whether it would or should compete with commercial banks’ deposit base. The central banker said she was concerned that in times of financial instability citizens could transfer money to a state-backed electronic system, potentially increasing instability.
The type of technology to be used in the digital currency is up for grabs, according to Ms Skingsley. Much attention has been placed on blockchain, a complex set of algorithms that allows digital currencies to be traded and verified over a network of computers without a central ledger. Four of the world’s biggest banks recently clubbed together to develop their own form of digital cash.
Ms Skingsley said: “I’m indifferent if people want to use our product or another way of paying if they think it fulfils the basic demands we have for money.”
Skingsley said the Riksbank would need to look at a number of issues, including technical, legal, practical and security matters and would decide on an e-currency within the next two years. We are confident that at the end of the two year “evaluation” period, the central bank will proceed with demonetizing physical cash, and become the world’s first fully-digital “cash” society, with other developed nations soon to follow.
History and images
The first time this was published on the Internet was on May 9, 2002 at Allbrevard.com. According to the backstory, five days prior, one of the webmasters discovered that folding a new (September 1998 redesign) $20 bill in a certain way would reveal pictures eerily similar to the World Trade Center and Pentagon ablaze, while at a NASCARparty. (What he smoked remains unknown, nor why he was at a NASCAR party.) Five days later, a web page was put up without any initial expectations, but after posting a message on a user newsgroup, the whole thing spread like wildfire. Within ten days, the site had received over one million hits, eventually leading to Glenn Beck putting it on his show and website, eight days after Allbrevard’s creation, which in turn led to the discovery of more hidden images in dollar bills of lower and higher denominations. This is usually coupled with the fact that you have to ultimately fold the bill into an airplane to see the picture and/or that the folded bill has five sides, like the Pentagon.
Without further ado, let the decoding begin:
The initial discovery and source of shock and awe.
1. Fold a $20 bill in half, so that you see the top half of the reverse side (like this.)
2. Fold the left half away from you, as shown here.
3. Fold the right half so that the burning Pentagon is revealed (see here.)
4. Flip the bill over to see the World Trade Center, surrounded by smoke. (presto!)
5. Or just mash it a bit and get this. 9 + 11 = 20 (The date of 9/11, twenty dollar bill), and see Osama.
($1 bill must be not too new and not too old) Hold dollar bill with pyramid and eagle facing you. fold eagle behind the pyramid. If folded exactly in half the two circles will align on top of each other and touching on both sides. Hold up to an old light bulb to see the face of Baphomet come through the pyramid side. (The eyes will come through in the two circular clouds just below the eye on the pyramid).
Repeat the same steps. The result is the Pentagon before the attacks.
Repeat the same steps again. The result is the Twin Towers on fire.
And again. This time, you get the building collapsing.
All you get this time around is a bunch of smoke, which looks more like someone played around with the MSPaint airbrush tool. Just a bunch of smoke, presumably a result of a fallen building, perhaps after being hit with an airplane. When was this dollar bill made? Well before 9/11. So what is with the Twin Towers, in a mass of smoke?