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Sweden Is Ditching Cash. Just Wait for the Fallout

Sweden Is Ditching Cash. Just Wait for the Fallout
Sweden Is Ditching Cash. Just Wait for the Fallout

Switching to digital money risks shutting out some of the most vulnerable members of society.

Bjorn Ulvaeus, one-quarter of Swedish pop group ABBA, became a standard-bearer for a world without cash after his son got burgled. Ditching coins and banknotes would hurt criminals and tax-dodgers while helping businesses and government budgets, he reckoned. “Sweden would be the ideal country to make cashless,” he told Bloomberg in 2014. “I think that should be the future.”

Nearly a decade later, he’s almost got his wish. A minority of Swedes said in a survey they’d used cash in the previous 30 days, while a whopping 95% of 15- to 65-year-olds has downloaded mobile payment app Swish, owned by lenders including Danske Bank A/S and Swedbank AB. Phone tapping and card swiping dominate shopping, donations for the homeless and church collections. Cash transactions declined to 8% of business payments at the end of 2022 from 18% five years earlier, estimates Jonas Hedman of the Copenhagen Business School. With such low volumes, it’s effectively unprofitable to handle cash.

Sweden’s an extreme case: It’s a small, tech-savvy economy. But the direction of travel is the same everywhere, accelerated by a pandemic that saw QR codes replace restaurant menus and spending online rise — even in Sweden, where lockdowns were less strict. Given central banks everywhere are mulling their own digital currencies to offset the risks of cashlessness, there are lessons for us all.

Swipe-Happy

Card payments per person per year have ballooned across Europe since 2012

Source: Riksbank

ABBA’s Ulvaeus got a few things right. Cash-related crimes like robbery are down, as is tax evasion. Black-market activity has also shrunk. Just as Sweden brought more under-the-counter cash into the regulated economy by offering tax breaks, pandemic-era benefits doled out by governments appear to have had the same effect. It may be one reason why Europe is seeing a jobs boom despite flatlining growth.

What do you think?

Written by colinnew

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