But a drawback to this development is that if it continues, Sweden may find itself in a few years’ time in a position where cash is no longer generally accepted by households and retailers. Technological development may in other words make physical banknotes irrelevant. This raises a number of fundamental issues about the payment system which we have not previously needed to consider. If cash were to be completely phased out within a not-too-distant future, there would, basically for the first time in modern Swedish history, no longer be a means of payment whose value is guaranteed by the state, via the Riksbank. We would therefore face a situation where all means of payment available to the general public are issued by private actors, on a payment market that is highly concentrated. This could make it more difficult for the Riksbank to perform its remit of promoting a safe and efficient payment system. In light of this, the Riksbank has been looking into the scope for issuing a new form of digital cash, a so-called e-krona, for some time. In this age of digitalisation, with several already existing so-called cryptocurrencies and others, such as Libra, on the cusp of being introduced, the Riksbank is far from the only central bank looking at the issue of digital central bank money. But as cash use is declining so rapidly in Sweden, there is more pressure on us than on other countries to come to a conclusion. The Riksbank has presented its work on the e-krona in two reports.
Box 8 of the Review discusses recent market initiatives for improving the functioning of the credit derivatives market. As shown by the chart on the right, the structure of market participants on the two sides of the credit derivatives market has changed over the past three years. Among the buyers of credit protection, the share of banks has declined in favour of hedge funds and other investors, such as private equity firms. Among the sellers of protection, insurance companies have increased their share at the expense of banks. It is worth noting, however, that hedge funds have been active also on the issuing side of the credit derivatives markets which is a business typically characterised by lucrative fees. 5.2. Euro area banking sector  With regard to the financial situation of large euro area banks, the financial results, overall, paint a picture of a very profitable banking sector with rather comfortable solvency ratios. In most euro area countries, bank profits were driven by continuing cost control and volume growth in mortgage lending that more than compensated for the narrowing of interest rate margins. Moreover, banks have also benefited from a recovery in lending to the non-financial corporate sector, as well as from the buoyant growth in fees and commissions. It should also be kept in mind, however, that the introduction of new international accounting standards might have had an impact on banks’ profitability.