Finland CBDC Tracker

Finland is currently in the research phase. Unlike some other members of the European Union, Finland appears to be largely deferring to the European Central Bank’s work on its CBDC (referred to as the digital euro). However, it is worth noting that Finland technically launched the first CBDC in the 1990s when the Bank of Finland created the Avant card. The concept never gained widespread adoption, so the Bank of Finland closed the project in 1995.

Note: This page is dedicated to the work done by the government in Finland. However, Finland is a member of the European Union and Eurozone. If the European Central Bank launches a CBDC (referred to as a digital euro), then this page will be changed to reflect that. Until then, the Eurozone page has notes about the development of the digital euro.

CBDC History and Development

Finland made history during the 1990s with what may be considered the first CBDC. Aleksi Grym and Antti Heinonen, two officials from the Bank of Finland, have documented the developments during this period extensively. The following history from 1989 to 1985 is sourced from their work.

March 1989 is a useful starting point because it marks when Martti Granberg delivered a presentation at the Bank of Finland's “Electronic Payment Systems” seminar. A few months later in June, Granberg was recruited to head the Bank of Finland's smart card unit. Less than a year later, a memo titled “Smart Card and Monetary Policy” was circulated.

Throughout 1990 and 1991, the Bank of Finland circulated memos, held meetings, and convened events centered on the idea of the central bank offering digital money through smart cards. These discussions focused on the implications of the central bank competing with commercial banks, the technology that would be behind the system, and the logistics of creating this new operation. During this time, according to Grym, a technical schematic and legal evaluation for central bank-issued electronic money was presented to the board of the Bank of Finland.

In March 1992, the Bank of Finland created a limited liability company to develop and launch a smart card-based payment system. The plan was to fist introduce non-reloadable smart cards that held 30, 50, or 100 markka. Then, reloadable cards would be later introduced. An early estimate expected demand for 2-3 million non-reloadable cards.

The smart card-based payment system officially launched on December 15, 1992 under the name Avant. By the end of the 1993, around 125,000 Avant cards had been sold. For reference, Finland had a population of approximately 5.06 million people at this time.

The Avant system is often considered the world’s first CBDC because it was digital money managed by the central bank and used by citizens. However, unlike most account-based models considered today, this system was token-based. So rather than set up an account like opening a bank account, the cards could be immediately used once purchased.

According to Heinonen, the Bank of Finland began to explore exit strategies as early as February 1994. Although reloadable cards were introduced, it became evident that the marketing efforts were unrealistic and that objectives were getting delayed. For example, the non-reloadable cards were unprofitable. They only served to advance the brand.

By the end of 1994, the numbers were moving in the right direction, but they were not moving fast enough. The total number of non-reloadable cards sold and reloadable cards sold reached 336,000 and 7,000, respectively. Again, it was originally thought that millions of cards would be sold.

Several meetings were held throughout 1995 to discuss how to close the Avant system. According to Heinonen, the Bank of Finland decided early that it would be best to sell off the assets to the private sector. The Avant system was sold in November 1995. In the end, the total number of Avant cards reached 500,000. Of those, just 12,000 were reusable.

Human Rights and Civil Liberties Concerns

According to Freedom House,  Finland earned a perfect score across its treatment of political rights and civil liberties. Furthermore, it must be said that the ability of the government in Finland to abuse a CBDC directly is debatable because the CBDC that would be used in Finland would be provided by the European Central Bank—representing the European Union. Even then, however, it’s important to recognize that the creation of a CBDC could open the door to risks to financial privacy and financial freedom.

For additional information on concerns regarding violations of human rights and civil liberties, see the following reports by Amnesty International, Financial Tyranny Index, Freedom House, Human Rights Watch, Privacy International, and the U.S. Department of State. For additional information on concerns regarding the risks of CBDCs, see the following webpage and report by the Cato Institute: The Risks of CBDCs and Central Bank Digital Currency: Assessing the Risks and Dispelling the Myths.

For additional information regarding metrics, the methodology page explains each of the data points and provides their respective sources.