The Strategist

Cashless payments carry Sweden too far

03/02/2018 - 11:21

Sweden is the first country where cash is almost out of circulation. Has gone this process too far?

flyerwerk via flickr
flyerwerk via flickr
The trend for the denial of cash in Sweden is increasing. Almost everyone there is now paying with a card or a mobile phone. However, the local authorities are starting to worry about this process, writes Bloomberg.

In early summer, the central bank of the country should issue a report, where the situation with the disappearance of cash and its assessment will be examined in detail. Bloomberg quotes a representative of the regulator who says that too fast a process of avoiding cash can have negative consequences: it will be difficult to maintain a monetary infrastructure.

Recall that most branches of banks in Sweden have already stopped working with cash. Restaurants and museums now accept only plastic cards and payments through mobile systems.

The problem is that many people still do not have access to digital technologies, and this primarily concerns the elderly population.

Last year, the amount of cash and coins in circulation in Sweden fell to a minimum since 1990; compared to the 2007 peak it dropped by 40%, while the decline in 2016 and 2017 was the highest in the history.

The annual survey of Insight Intelligence published last month showed that only 25% of Swedes paid cash at least once a week in 2017, compared with 63% just four years ago. With this, 36% do not use cash at all, only perhaps 1-2 times a year.

The central bank is considering issuing an official digital currency - E-Krona. However, the final proposal on this issue is not expected to arrive until the end of next year. Nevertheless, the idea is that the electronic kroner will work as an addition to cash, and not completely replace it.

Most recently, the head of the Swedish Central Bank announced the need to think over a mechanism in which banks will be required to provide cash to their customers.