The government and the Riksbank must strengthen the role of cash in the Swedish economy

It is obvious that Sweden needs to upgrade its cash system, and the Minister for Financial Markets, Niklas Wykman, has announced that he wants to strengthen the ability to trade in cash, especially for essential goods such as medicines, food and fuel. An inquiry has been established and will present its final report in December. The Minister for Financial Markets believes that this is urgent as there are groups that, for various reasons, find it difficult to use digital payment methods, but also that it is important from a preparedness perspective in the event of a crisis or a war.

By 2026, the Riksbank will open at least five cash handling offices. However, there is a great risk that after the dismantling of its own cash infrastructure from the late 90s, it has fallen behind in the work needed to succeed in its own mission – to ensure a satisfactory level of banknotes and coins in kronor (cash) throughout Sweden.

According to the Riksbank’s own survey, only one in ten people last paid with cash when buying in stores. No wonder, as it is expensive and difficult for merchants to accept cash when they have already been feeling the financial squeeze since the pandemic. In addition to the fact that they are currently not obliged to provide cash, there are other risks such as violating the law on cash registers in the event of the cash register losing power.

The state is no better. Most government agencies do not currently accept cash either. Today, you cannot pay your taxes in cash and to buy a train ticket from SJ, you are referred to 7-Eleven or Pressbyrån – a service that is also subject to a fee. As for the banks, private banks offer cash in both local branches and ATMs, while the state-owned bank SBAB does not offer any cash services at all. Paying bills with cash has also become more difficult since the state-subsidised Kassagirot was discontinued. The fact that even the state does not accept its own cash, risks undermining confidence in cash at its core.

Sweden needs an upgrade of its cash system and it is a positive step that an inquiry has been established by the Minister for Financial Markets. The private market is an obvious part of the solution and banks already provide branches, ATMs and deposit machines. Banks have also started to build up cash in transit services (Di, 17 July 2023), which is making a dent in the Riksbank’s infrastructure problem.

What is needed now is to create the conditions to make cash more attractive to the public, where a number of measures are required that fall outside the government’s ongoing inquiry:

1. Set a target for the proportion of payments made in cash
   This is to make it possible to discuss the problem of cash as a viable means of payment in normal conditions and in the work on preparedness.
2. Make it easier for all merchants to accept cash in physical stores
   Instead of the exception proposed in the payment inquiry, merchants should always be able to accept cash even if their cash register system is without power and not working, for example.
3. Make it cheaper for all merchants to accept cash in physical stores
   Let the government subsidise part of the cost of the merchants’ handling of cash.
4. Give instructions to government agencies to accept cash
   Confidence in cash will increase if government agencies can also easily accept cash without additional costs.
5. Involve the private sector, merchants and banks to a greater extent
   Welcome suggestions on how existing regulations can be simplified to facilitate the use of cash and to expand the infrastructure.

We hope that the inquiry established by the Minister for Financial Markets will, in December, take a broader perspective than the Riksbank’s. New legislation alone will not solve the basic problem of making cash more attractive again and securing its role in society. Success will require collaboration between private and public players.

Read the article in Swedish.