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Sweden: State Needs to Strengthen Role in Payments

Categories : Cash and Crises, Cash does not require a technology infrastructure, Cash ensures competition among payment instruments, Cash has legal tender status, Cash is a contingency and fall-back solution, Cash is a public good, Cash is a symbol of national sovereignty
April 26, 2023
Tags : Acceptance of cash, Access to cash, Regulators, Sweden
In Sweden, an inquiry concludes that the state should ensure better access to payments, recommends mandating cash acceptance, and sees no current need for a digital krona.
Guillaume Lepecq

Chair, CashEssentials

This post is also available in: Spanish

In December 2020, the government appointed Anna Kinberg Batra as a special investigator of the state’s role in the payment market. The investigation is known as the Payments Inquiry. The investigation’s mission was to review the state’s position in the payment market and decide what the part should look like. This is against the background of the rapid digitalisation of the financial and payment market and the reduced use of cash.

The Role of the State in the Payments Market

Anna Kinberg Batra submitted the Payments Inquiry report to the Ministry of Finance on 31 March. The report concludes that the payments market and the entire payment ecosystem have been subject to rapid digitalisation. This creates new services and contributes to efficiency, but large groups are excluded. In addition, system vulnerabilities have arisen. For these reasons, the state needs to play a more significant role.

“Everyone makes payments. Paying is by far the most common legal act performed by a person. But above all, payments have a very great significance for the way the whole of society functions. Payments must be efficient, accessible and secure. The State has an interest in ensuring this, not least through legislation.”

The inquiry, therefore, proposes that more people must be given access to payment accounts, including through more effective supervision and that banks use the possibility in the legislation to offer accounts with more limited functions (low-risk accounts). In addition, the government should strengthen and broaden efforts to ensure that everyone in Sweden can make payments at a reasonable cost, regardless of the payment method.

“In the first instance, the State should assist more people to enter the digital payment market – not make it less costly and onerous to remain excluded from it. At the same time, the possibility of paying with cash is also important for a more inclusive payment market, but also from a civil preparedness point of view. In this respect, too, there are reasons for the State to assume a greater responsibility.”

Ensuring Acceptance of Cash

To secure food supplies, especially in a peacetime crisis and in the event of an emergency, the state should guarantee certain offline payments for a limited time. This applies to physical stores that sell essential goods.

 The inquiry proposes that the Swedish Tax Agency must be able to grant exemptions from obligations relating to cash registers to facilitate cash payments in times of crisis.

Businesses that supply essential goods (including prescription drugs, food and fuel) should accept multiple means of payment, including cash. It should be possible to pay taxes in cash up to a certain amount. Following jurisprudence, the inquiry assesses that state, municipal and regional authorities are obliged to accept cash. This also applies to private actors who perform related activities on behalf of the public sector.

The inquiry recommends that the government review the position of cash and access to cash services by 2025 at the latest. The review should at least cover the options for making cash payments, particularly for essential goods such as medicine, food and fuel, access to cash services, and the development of the cash infrastructure, including the distribution of banknotes and coins. Should such a review show that the possibility of paying for essential goods in cash is impaired, legislative measures should be considered.

No Need for CBDC

In addition, the inquiry estimates there is currently no sufficient societal need for the Riksbank to issue an e-krona. Changes in the business environment may lead to a different assessment in the future, and the Riksbank should continue to evaluate the conditions for an e-krona and return with a recommendation to the Parliament in 2024.

This post is also available in: Spanish