• Tue. Aug 2nd, 2022

Swedish municipality seeks to diversify its investment portfolio with cryptocurrencies

ByHazel R. Lang

Jan 10, 2022

“We think we will receive offers on this in the future and now want to investigate to be better read. I think a lot of people need to go on a knowledge journey; Then everyone has to do their own assessment. Investments will be made through crypto funds that track the value of cryptocurrencies. The municipality of Staffanstorp in Sweden has agreed to research cryptography. All politicians agreed to this by April 20, 2022. The municipality has a robust economy and an investment portfolio of over 500 million Swedish Kronor (~ $ 55 million). Investments made by the municipality include fixed income securities and securities. The municipality is now considering crypto investments as a possible method of diversifying risk. Christian Sonnesson, president of the city council, believes that it is not about owning bitcoin.

The president weighs

Opposition Leader Pierre Sjostrom agreed but expressed concern about the risky nature of crypto, given that tax revenues will be used.

Should the investigation lead to a positive result, it is not clear whether the law on local government would allow it. The law stipulates that “municipalities and regions must manage their funds in such a way as to meet the requirements of good returns and satisfactory security”.

Sonnesson believes fear of the unknown holds people back. He would like to be the first municipality in the country to invest in crypto. But being the first is not an end in itself. “I wish everyone had taken a closer look at it,” he says. It’s not about owning bitcoin either.

Annika Wallenstom, chief economist for Swedish municipalities and regions, accepts Staffanstorp’s initiative. “If you don’t want to take any risk, you might not get a return either, so it’s always a valuation,” she says.

E-Krona pilot in preparation

The Swedes are slowly moving away from banknotes and coins. The Riksbank has examined whether the issuance of a digital version of the national currency can be initiated, namely the electronic crown, which would allow access to a state-issued currency, albeit in digital form. This year, the bank will continue its investigation, test the technical application of the e-krona with a pilot, and compare different technological solutions for the e-krona.

A senior banking official in Sweden said the bitcoin trade was “like the stamp trade” and went on to say that money not issued by a central bank would fail.

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