Sweden could soon be the first country in the world to go cashless altogether, financial reports have revealed. Currently, Sweden is considered the most cashless nation in the globe. Data from Riksbank, Sweden’s central bank reveals that more Swedes have and use payment cards more frequently than cash. Again, up to 85% of the adult Swedes use online banking services.
Year after year, the Scandinavian nation has seen coin and note circulation contributing some percentage in its GDP (gross domestic product) drop. This is because Swedes make way fewer money withdrawals and instead prefer digital payment methods using such things as mobile and payment cards.
Just 2% of Sweden’s total transaction values consist of cash. This is still expected to decline to up to less than 0.5% by 2020, reveals a study conducted by BNP Paribas and Capgemini. The situation has already prompted the central bank to warn about the rapid increase in the rate at which cash is getting phased out of the lives of Swedes.
Stefan Ingves, the Governor of Riksbank earlier this year pointed out that if Sweden goes entirely cashless, then it would mean that only a few commercial players will be responsible for all the payments in the country, which will pose a threat to payments infrastructure. He added that Sweden is unprepared to face crises that may arise if it goes cashless.
Riksbank also asserts that demand for physical cash would most likely increase in crises situations, but with fewer coins and notes in circulation, the supply would be restrained. Also, some individuals have limited or completely no access to modern digital payment services, while still, some just don’t want to switch to digital services.
“Our starting point is that we offer coins and notes to the Swedish society to an extent that it wants to start using our versions of cash versus the other money versions as long as it’s safe and efficient,” detailed Cecilia Skingsley, Riksbank’s deputy Governor during one interview with a major news outlet.
“However, we’ve realized that this development, and also found out that there are some situations and some people and their geographies in which physical cash is necessary. For instance, refugees and elderly people are among such people that need access to cash whether or not an overwhelming majority of Sweden does not,” Skingsley explained.
The country could eventually get to a situation where legal tenders are no longer an effective and efficient exchange medium for commercial transactions, which is one situation that no country in the globe has experienced before,” the official noted.
Currently, a cross-party committee in parliament is reviewing the central bank legislation in Stockholm to assess whether or not banks are going to be forced to offer physical cash services to their customers. Bank branches are increasingly refusing to provide over-the-counter physical cash services as a result of declining demand.
While Sweden certainly appears to be the leading country as regards going cashless, other countries have also started seeing trends. Denmark, Norway, and the U.K are close behind. In Britain, for instance, digital banks offering only contactless debit cards and using banking apps have emerged.