The Strategist

Swedish Central Bank admits the country risks completely losing paper money


04/30/2019 - 10:13



The Central Bank of Sweden asked the parliament to clarify definition of the term “means of payment” “as soon as possible”, noting the rapid decline in cash use, as well as prospects for issuing digital currency in the future.



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The Central Bank of Sweden asked the parliament to clarify definition of the term “means of payment” “as soon as possible”, noting the rapid decline in cash use, as well as prospects for issuing digital currency in the future.

A press release from the Swedish Central Bank notes that the MPs were petitioned to form an ad hoc committee from a group of experts to re-evaluate the concept of "means of payment", role of the state in terms of developing means of payment in the digital economy, and the role and responsibility of the state and private sector in development of the payment market.

The Riksbank gave an example of creation of a committee of experts in the 1990s, when the country's authorities were deciding whether to join the eurozone or retain the Swedish krona as the national currency.

The Central Bank of Sweden insists on the need to clarify the concept of “means of payment” “as soon as possible”, taking into account current trends in reducing use of cash and spread of digital payments. An appeal sent to the Riksdag notes that, according to the Swedish Central Bank, "one cannot exclude a scenario of a not too distant future in which cash will lose its value, since the commercial sector will stop accepting them as means of payment."

In this regard, experts of the proposed committee should clarify which sectors will accept cash for payment. Among the proposed  public health and a number of others.

According to the chairman of the Central Bank of Sweden Stefan Ingves, “the concept of a means of payment must be technically neutral so that it can function even in a digital future”.

The central bank also noted that most of the world's central banks are already conducting research on the possibility of issuing centralized digital currencies (central bank digital currencies, CBDC). One of the issues that require opinions of the group of experts is an assessment of the consequences of issuing such a currency in Sweden and changes in legislation that may be necessary in this regard.

source: riksbank.se