Swedish central bank wants cash-protecting legislation as banknote usage continues to drop

Sweden is seeing a continued drop in cash usage throughout the country, moving ever closer to being a cashless society. However, there are those who believe that this is not a good thing, and that legislation is needed to ensure that banknotes and coins will continue to be an option for those who wish to use them in order to make payments.

One example is the governor of the country’s central bank, who recently called for the creation of such legislation.

More people are getting concerned about the dropping usage of cash

Sweden is often considered one of the countries that are the closest to becoming a fully cashless society. The country constantly sees further drops in the usage of cash, with a report published by Riksbank stating that the amount of notes used in 2023 went down by 10% compared to the year before.

However, while the majority seems to be fine with going cashless, 44% of Swedes have expressed a negative attitude toward the decline in cash use, according to the report. This is an 8% increase from 36% in 2022, suggesting that the awareness of the importance of cash and the fact that it is rapidly going away has started to spread.

Seeing the increase in the number of people interested in keeping the cash around, the central bank decided to get involved and address the matter. It said that banks should be obliged to accept deposits of banknotes and coins from people, which is currently no longer the case.

Apart from that, Riksbank also sounded the alarm regarding cash management. It claims that there is only one private company in the entire country that is transporting physical money to and from retail businesses. With that being the case, the bank suggests that the government put together a proposal regarding how Riksbank and other commercial banks might ensure that cash ends up transported.

The report says that having an alternative is necessary, in case the current system breaks down. As things are now, if that was to happen, there would be no alternative for the country to rely on.

Additional concerns that need addressing

Addressing the issue further, Riksbank suggested that commercial banks, as well as other payment service providers, should adapt their services. They point out that there are still people who struggle with the usage of digital technology, and that it is necessary to simplify payments and identification, as well as technical solutions, like biometrics.

Central bank also said it was concerned by the number of businesses and individuals that don’t have access to payment accounts. They are considered risky customers, and the banks avoid working with them. Instead, the central bank said that these individuals and businesses should be offered accounts with limited functionality, rather than just being abandoned.

Its governor, Erik Thedeen, stated: “Payments must work for everyone. In the longer term, all payments may be digital – but until then, cash plays an important role. We need legislation to ensure that cash can be used to pay. Banks must also ensure that more customers have access to payment accounts. These are important prerequisites for everyone to be able to pay today and in the future.”