Sweden’s Cashless Conundrum: Can Central Bank Save the Day?

As Sweden inches closer to a cashless society, concerns are growing about the impact on low-income individuals, rural communities, and those seeking financial security. In response, the country’s central bank, Riksbank, has announced plans to launch a digital currency, the e-krona, to preserve cash and maintain public trust.

The Problem with Cash

According to a recent survey by PRO, 99% of Sweden’s regular supermarkets still accept cash payments. However, Tallberg, head of PRO, argues that the real problem lies in the disappearance of banks where businesses can deposit bills – especially in rural areas. With over 280,000 people needing to travel more than 20 kilometers to access a cash deposit machine, the issue is becoming increasingly pressing.

The Swedish Parliament’s Response

The Swedish parliament has taken notice and voted in favor of a bill designed to preserve cash and ensure public access to nearby ATMs. However, critics argue that retailers’ attitudes are more likely to kill cash than ATM accessibility.

Concerns about a Cashless Society

As Sweden’s central bank struggles to stay relevant in an increasingly digital landscape, concerns about the risks of a cashless society are mounting. Without cash, individuals may be left vulnerable to financial instability and lack of control over their finances.

• KTH professor Niklas Arvidsson warns that a financial system dominated by private banks without central bank anchorage could lead to chaos and uncertainty.
• The Swedish Civil Contingencies Agency still advises citizens to keep small denominations of cash on hand for emergencies, emphasizing the importance of cash as a guarantee of stability.

Riksbank’s Digital Currency

Riksbank’s planned digital currency aims to complement cash rather than replace it. Users will be able to hold e-kronor in a digital wallet and make payments, deposits, and withdrawals via a mobile app. Some experts see this move as an opportunity for the state to wrestle market power away from commercial banks, which were found to be too dominant during the financial crisis.

The Challenges Ahead

However, others caution that this is an experimental period for Riksbank, and that the central bank must navigate its role in the digital age. The pilot program is expected to launch next year, with adjustments possible due to the ongoing COVID-19 crisis.

Conclusion

As Sweden’s institutions attempt to shape the country’s cashless future, it remains unclear whether this shift will ultimately benefit or harm the public. One thing is certain: the debate over cash and its place in society is far from over.