On 26 November, the ECB has published a non-legally binding opinion on the legislative proposal put forward by the Swedish government on 26 September 2019 requiring that large credit institutions provide cash services to the public. The purpose of the law is to ensure an adequate level of access to cash throughout Sweden in a context of ATM closures and branches which no longer enable cash deposits or withdrawals.
The value of cash in circulation has been halved between 2007 and 2018, dropping from SEK 111 billion to SEK 57 billion. But it has been increasing again since early 2018 as illustrated in the chart below.
The draft law applies to 6 financial institutions which hold deposits exceeding SEK 70 billion. The banks would be required to provide withdrawal services to consumers as well as deposit services for businesses.
“The ECB considers it important that all Member States, including non-euro area Member States, take appropriate measures to ensure that credit institutions and branches operating within their territories provide adequate access to cash services, in order to facilitate the continued use of cash.”
The proposal underlines that cash remains crucial for certain groups, including the elderly, immigrants, the disabled, socially vulnerable citizens and others with limited access to digital services. This could lead to disruptions in case of a contingency or malfunction of the payment system. The ECB notes that “the ability to pay in cash remains particularly important for certain groups in society that, for various legitimate reasons, prefer to use cash rather than other means of payment, or who are unable to use digital technology. Additionally, cash payments facilitate the inclusion of the entire population in the economy by allowing it to settle any kind of financial transaction in this way”.
In October 2018 the Riksbank had also welcome the initiative as a step in the right direction. The Riksbank had suggested however that the obligation should be extended to all banks. It also called for the clarification of the legal tender status, stipulating that “activities that are important from a citizen’s perspective shall be obliged to accept cash (for example pharmacies, special transport services, food shops, petrol stations).”