The country’s central bank Riksbank announced in November last year it was looking into the possibility of launching its own digital currency, “e-krona”.

An HSBC economic bulletin sent to clients this week said that Sweden could be the first country in the world to do so within the next few years.

Riksbank said on its website: “The use of banknotes and coins is declining in Swedish society.

“At the same time, virtual currencies and payment methods are moving rapidly are undergoing rapid technological development. The Riksbank will now investigate whether kronor need to be issued in electronic form.”

But Sweden’s neighbouring country did not agree there would be significant benefits to a move to a digital currency.

The central bank of Denmark said in December introducing a digital version of its currency would pose risks to financial stability without improving payment solutions for its citizens.

It said in a statement: “[A] central bank digital currency would present challenges to financial stability and would not provide any new opportunities for monetary policy.

“In a Danish context, it is unclear what central bank currency would be able to contribute that is not already covered by the current payment solutions.”

The bank’s inquiry is expected to be finalised by the end of 2019. The bank also said the e-currency would not replace cash but could be used to complement the current physical currency.