The Swedish Payments Laboratory

Sweden is often considered as a payments laboratory for the rest of the world. It has often been at the vanguard of different trends.

It is amongst the countries with the lowest levels of cash in circulation, measured in relation to GDP as illustrated by the chart below.

Sweden is also amongst the first countries to adopt regulation to ensure the access to and acceptance of cash. 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 Calls for Further Protection of Cash

The central bank has been voiced concern about the risks associated with the privatisation of money. In 2018, Riksbank’s Governor Stefan Ingves wrote “the payment system is often said to have an element of public good, which implies that the public sector has an important role – in this case in ensuring that payments can be made safely and efficiently at all times. Other examples of public good are the armed forces, the judicial system and official statistics. Most citizens would feel uncomfortable with handing over these public services to private companies entirely.” In October 2019, Ingves called for stronger legal protection for cash. “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.” said Ingves. The Central Bank had proposed to the Parliament in April to establish a committee to review the concept of legal tender.

Sweden has also been amongst the first countries in the world to consider introducing a digital currency. The central bank is already running a pilot project with Accenture Plc to introduce an e-krona based on the same blockchain technology that underpins digital currencies like Bitcoin.

On 11 December, the Ministry of Finance announced that a special investigator will review the role of the state in the payment market and determine what the role should look like in the future. The review will be based on a thorough and broad analysis of:

• The current and historical role of the state,
• Changes in the financial and payment markets as a result of technological development and digitalisation,
• New payment methods and declining use of banknotes, coins and cash
• The future payment market.

The Division of Roles Between State and Business

The investigator shall inter alia:

• Map out what the payment market looks like; how it is regulated and assess what the future payment market will look like based on developments in Sweden and in other countries,
• Map the division of roles between the state and the business community in the payment market and take a position on the state’s future role in the payment market,
• Take a position on the meaning and need for certain means of payment to have the status of legal tender,
• Take a position on the need for the Riksbank to issue digital central bank money, so-called e-krona, and
• Decide whether constitutional proposals or other measures are necessary and, if necessary, propose such.

A reference group with representatives of all political parties in the Riksdag shall be attached to the investigator. The review must be completed no later than 30 November 2022.