The Strategist

Sweden to say "no" to a cashless society, in the end.

02/09/2017 - 17:41

After what slowly became a real build-up to the decision, Sweden is opting for a last-minute turn-around. Cash-killing supporters around the world are much disappointed with the change of heart, as Sweden was expected to be the champion and testing ground for the socio-economic experiment.

Over recent years, cash in all Scandinavian countries has been on the path to slow demise. New technologies, including smartphone payment solutions gradually nibbled the market share for hard currency. And given the low crime-rates in Scandinavian countries, cash is quickly associated with misdemeanors, to say the least. There have been cases, in recent years, where people trying to make purchase in cash were reported to the police, with the suspicion of criminal activity.

Then banks started wondering what a world without cash would be like. After a mere glance at their profit sheets, they quickly realized that cash segments were nowhere near the most profitable. Cash is a pain to handle, distribute, manage, protect and store. ATMs require maintenance technicians (just as electronic payment systems!), and clerks need time and machines to count cash, all of which costs money. Of course, virtual money has costs of its own, but stand no comparison with hard cash. Comparatively, virtual money running on servers is more efficient, economically at least. So, they quickly started pushing for the outing of cash from their economy.

Only then did the States jump in. States are in charge of producing the actual notes and coins, which comes at an obvious cost. Because Sweden is not in the Euro zone, it has to design, produce and distribute its own currency. Given the technology contained in notes, that cannot be cheap. And once the currency has been distributed to the public, it gets torn, lost, stolen, forged and eventually laundered. All the more expense costs for the state. In addition, killing cash is supposed to reinforce State authority and ability to fight crime.

The first hamper on the move was social justice: this would have made life somewhat simpler and higher-tech for most, but left the most vulnerable out of the gig. Tech Insider noted, in its June 14 article : “The trend has its downsides. In addition to burdening people who don't keep up with new technology (like the elderly and some rural citizens), a cashless society is also more vulnerable to electronic fraud. In 2014, the number of fraud cases rose to 140,000 — more than double the amount from a decade ago, Sweden's Ministry of Justice reports. Critics of a cashless system fear even greater surges as payments move online.”. PRO (the national pensioners fund) added, “PRO welcomes digital development, but you cannot leave a group behind,” she said. “We do not accept that certain groups are excluded from the payment market. There are still situations in which there are no alternatives to cash.”

The question of civil liberties was quite central to the turn-around motion, although it was left much unaddressed. The Swedes are very attached to their democratic freedom, and realized that, without cash, they would be under complete control of the banks and the state. Strangely, though they do not favor cash in their daily use, hard currency revealed itself as something they want to keep, if only to keep the option for a rainy day. 

Two fundamental subjects rise, in such a debate: ability and time. It isn’t because some Swedes find cash less practical in their everyday operations that they don’t want the ability to use it. In recent years, payment methods multiplied adding old fashioned checks and wire transfers to Paypal and contact-free debit cards. Each time, liberty increased for the users. They no longer had to have a checkbook handy, or wait for opening hours at the bank, or have an active internet connection, their smartphones increased their ability to make payments whenever and wherever. And countries as democratic as Sweden like to see their liberties increased, not decreased.

At the bottom line, killing cash in one (very handy) option to make payments, and killing it amounts to limiting economic freedom. The second parameter is time: true, the current Swedish government is respectful of civil and fundamental liberties. But governments change, and new ones inherit the powers of the old ones. So if a country were to give exceptionally large powers to its government, such as total economic power and control, it may well be that the government in place will make proper and sensible use of this power. But what happens when the next government, a little less hell-bent on democratic liberties, comes into power? How can one be sure the same appropriate use will be made of these powers? In Sweden, as in many other European states, the threat of a far-right electoral victory looms almost every year. Citizens best not be short-sighted…

This may have flown way above the head of many, but a fundamental right has just been saved from oblivion in the kingdom of Sweden. Whether police agencies like it or not, whether governments like it or not, and whether even the people like it or not, liberties are measured in the number of things we may or may not do, of our own initiative, without answering to someone just after. And because economies are a major pillar of our societies, that includes buying things.