In recent years, Sweden has been at the forefront of a global shift towards digital payments. Even Björn Ulvaeus, a member of the Eurovision-winning band ABBA, has been vocal in campaigning for the elimination of cash, arguing that it is a tool often favored by criminals.
Despite such views, the Swedish government, along with the Riksbank, the country’s central bank, has been exploring various measures to ensure that cashMoney in physical form such as banknotes and coins. More remains a viable and accessible paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More option for all members of society. In a recent press release, the Riksbank announced its support for the obligation to accept cash and strengthen banks’ responsibility for cash handling.
Cash plays a crucial role in ensuring financial inclusionA process by which individuals and businesses can access appropriate, affordable, and timely financial products and services. These include banking, loan, equity, and insurance products. While it is recognised that not all individuals need or want financial services, the goal of financial inclusion is to remove all barriers, both supply side and demand side. Supply side barriers stem from financial institutions themselves. They often indicate poor financial infrastructure, and include lack of ne... More and resilience in the payment system. Despite the growing popularity of digital payment methods, cash remains essential for various segments of the population, including the elderly, those with limited access to technology, and those who prefer the privacy and tangibility of cash transactions. Moreover, cash serves as a reliable backup during technical failures, cyber-attacks, or other disruptions to electronic payment systems.
In response to the declining use of cash, the Ministry of Finance in Sweden appointed a Cash Inquiry last year to explore potential measures to safeguard the role of cash in the payment system. The Riksbank has recently submitted its consultation response to the Cash Inquiry, expressing its support for several key proposals aimed at preserving the cash infrastructure.
One of the central proposals put forth by the Cash Inquiry is the introduction of an obligation to accept cash for the sale of essential goods and services. This obligation would apply to businesses and organizations that provide essential goods, such as supermarkets, and those that charge fees under public law, such as health centers. According to the Riksbank, this measure is crucial for ensuring that all members of society can make payments, regardless of their access to digital payment methods.
Erik Thedéen, Governor of the Riksbank, emphasized the importance of this proposal, stating, “People should always be able to pay for food, healthcare, and medicines both digitally and with cash. The increasingly turbulent global situation, increased cyber-attacks, and also the major power outages in southern Europe show the importance of being able to make payments even when the internet is down.”
In addition to the obligation to accept cash, the Cash Inquiry has proposed measures to strengthen the responsibility of banks in handling cash. The Riksbank has expressed its support for these proposals, which include extending and clarifying the responsibility of major banks to offer services to their corporate customers with regard to overnight deposits and petty cash.
The Riksbank believes that these changes are necessary to protect the cash infrastructure, which is currently very vulnerable. By ensuring that businesses can make cash deposits and receive petty cash, the banks can play a more active role in supporting the use of cash in society.
Furthermore, the Riksbank has endorsed the proposal to require banks to allow private individuals to deposit banknotes into their accounts. Until now, there has been no legal obligation for banks to provide this service, which is essential for the role of cash as a means of payment. By introducing this requirement, the Riksbank aims to ensure that individuals have access to basic cash services, thereby promoting the continued use of cash.
The Riksbank has stressed the urgency of introducing these legislative measures to protect the cash infrastructure. Erik Thedéen highlighted the need for immediate action, stating, “The cash infrastructure is currently very vulnerable and urgent legislative action is needed to protect it. It is essential that businesses can make cash deposits and receive petty cash for people to be able to use cash in society at all. The banks should take more responsibility for the cash of both their corporate and private customers.”
Sweden’s efforts to reverseThe back of the banknote or coin. See Obverse. More the decline in cash usage reflect a broader recognition of the importance of cash in ensuring financial inclusion and resilience in the payment system. The proposals put forth by the Cash Inquiry, with the support of the Riksbank, aim to introduce an obligation to accept cash and strengthen banks’ responsibility for cash handling. These measures are crucial for preserving the role of cash in society and ensuring that all members of the population can make payments, regardless of their access to digital payment methods.
Sweden’s efforts to safeguard the cash infrastructure serve as a reminder of the difficulty of resetting cash as a mainstream payment methodSee Payment instrument. More following years of declining usage. It has been compared to trying to put toothpaste back into the tube.