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Riksbank Governor Calls for Further Legislation to Protect Cash

Categories : Cash is a contingency and fall-back solution, Cash is a public good, Uncategorized
October 19, 2020
Published in : Acceptance of cash, Central Bank, Legal tender, Sweden
Riksbank governor calls for stronger legal protection for cash. The Central Bank recommends to review the concept of legal tender. “If it were to be established by law that one was forced to accept cash in Sweden, more of us would probably choose to have cash in our wallets.” says Ingves.
Guillaume Lepecq

Chair, CashEssentials

Cash in Circulation has been on the rise in Sweden since mid-2017 and as in many other countries there was a spike in demand in the first half of 2020. Between end of March and end of June, cash in circulation grew by 6%.


Source: Riksbank.

Nonetheless, Sweden remains at the bottom of the league when comparing cash in circulation to GDP.

A new law came into effect on January 1st requiring banks to provide an adequate level of cash services. The law was designed to protect the more fragile people such as the elderly, migrants, those with disabilities, the rural or those who do not have access to digital payments.

Riksbank Governor wants to do more to protect cash. In an Economic Commentary, the Governor presents a vision for the future of money and payments.

“Money and how we make payments are changing. Not so very long ago, cash was totally dominant. Now we have money in accounts and we make payments in the form of transfers between accounts. This development has many benefits. But if we do not adapt our money and legislation, it will also entail risks and potential losses.” says Ingves.

Cash is still needed

Cash fulfills important functions today. It offers a safe alternative to commercial bank money. It works when the electrical or digital infrastructure is down. It works for those who are digitally excluded.

If cash continues to decline at the same pace as before, Sweden will in practice be a cashless society within a decade or two,  predicts Ingves and this would mean that citizens would no longer have access to State to Central Bank money. Consequently, the Riksbank is investigating whether it is possible, and desirable, to issue a digital complement to cash, a so-called e-krona. Just like cash, the e- krona would be issued by the Riksbank and available to the general public.

Cash needs strong legal protection

“I do not believe the Riksbank can do very much to stop the development towards a decline in the use of cash. But we should do what we can.” says Ingves.

“However, I believe that stronger legal protection for cash could slow down the decline in its use. If it were to be established by law that one was forced to accept cash in Sweden, more of us would probably choose to have cash in our wallets.”  The Central Bank had proposed to the Parliament in April  to establish a committee to review the concept of legal tender. In June 2019, the Riksdag forwarded this proposal to the Government, but unfortunately no expert group has yet been appointed.