"All banks should be obliged to handle cash", says Sweden's central bank committee

Oct. 23, 2018 Share Source

The recent proposal for major banks to secure cash access across Sweden from a key Riksbank committee in review of the country's monetary policy represents a significant shift in the war on cash. 

Over the past few decades, Sweden's increasingly cashless culture has been tainted as the first piece of evidence suggesting that the world is going cashless. However, not everyone is on board with Sweden's global influence favouring a cashless future. 

On June 4th, 2018, Riksbank governer Stefan Ingves, compared monetary policy to health, explaining how when it works one doesn't think about it, but when it fails, it's all one can think about. In relation to cash access, Ingves believes that the same mentality applies. 

"The background to this is formed by the rapid changes on the payment market and the rapid decrease in cash usage in Sweden – a development that we are practically alone in, worldwide. [...] This means that we have to take the lead and prepare for the new situation faster than other countries." Stefan Ingves

After publishing its interim report, "Tryggad tillgång till kontanter" or Secure access to cash (SOU 2018:42) in June, a consultation was held by the Riksdag committee on Riksbank proposing all major banks and other credit institutions shall be obliged to offer cash services.

“The possibility to make deposits shall be included in the concept of cash services. This is a service that consumers can reasonably expect of banks,” says.
" Stefan Ingves Governor Sveriges Riksbank

The push to protect cash from within Riksbank is years in the making. 

In March 2016, Riksbank submitted a statement to the Ministry of Finance's consultation calling for the Swedish parliament to introduce a clear obligation for banks to provide basic cash payment functions that meet customers’ needs. The letter was signed by Stefan Ingves, the Riksbank Governer in response to the much too rapid reduction of cash handling services across the country. 

The policy would apply to major banks - those that provide checking accounts and have more than 70 billion kronor in deposits from the Swedish public. The proposal also includes “reasonable access to those services in all of Sweden,” meaning that 99% of Swedes should have up to 16 miles to travel for a cashpoint. 

“We believe that the continued development of access to cash in society needs to take place in a controlled manner so that the public’s and society’s need for cash is fulfilled,”
" Riksbank Committee Dagens Nyheter op-ed As quoted via Bloomberg

Once celebrated for it's bold strides towards a cashless future, the scandinavian nation is now in a little confused. Over the past year, policymakers have been reconsidering the two main issues that would arrise in a cashless Sweden:

  • the needs of the elderly population, alienated by new technology,
  • and the needs of the entire country in the face of a poweroutage.

The proposal has sparked a nation-wide cash debate. What body should be responsible for making cash accessible in Sweden?

According to reports by Bloomberg, Sweden's competition and financial watchdogs both oppose the proposal. Arguing that access to cash should be the responsibilty of the state and not private banks, are Financial Supervisory Authority and ATM provider, Bankomat. They look to the state because the handling of notes and coins is such an important part of a country’s infrastructure.

“The possibility to make deposits shall be included in the concept of cash services. This is a service that consumers can reasonably expect of banks,”
" Stefan Ingves Governor Swedish National Bank

Excerpt from Riksbank (Oct 22, 2018)

As cash use is declining rapidly, it is important that the Riksdag adopt a position on the issue of what constitutes legal tender in Sweden and its connection to the Swedish krona as a currency. Any legislation should be as technology-neutral as possible in order to also be applicable to any future means of payment issued by the Riksbank.

Read full Riksbank article here 

Excerpt from Riksbank Execuive Board response (October 17th, 2018)

The Riksbank supports the Riksbank Committee’s proposal to extend the scope for government support to companies that enables another company to provide basic payment services. The Riksbank also supports the proposal to increase information and marketing efforts as regards the possibility to apply for government support for the provision of basic payment services.

Read full letter from Riksbank's Executive Board

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Last Updated: Oct. 31, 2018