Sweden Minister Says Cashless Society "Not Possible"; Elderly, Disabled People Blamed

It was just a little over a week ago when we reported that Sweden had begun a 5-year countdown to becoming a cashless utopia.

As The Local reported, “cash transactions today represent no more than two percent of the value of all payments made in Sweden, [and that estimate] will drop to below 0.5 percent within the next five years.”

According to Visa, Swedes use debit cards three times more than other Europeans. Even the homeless accept electronic payments. “The spread of debit cards has had a profound effect even on the street level with fruit and veg traders and even buskers and retailers of homeless magazines accepting cards or electronic payments using the popular Swedish smartphone app Swish,” The Local goes on to note.

As 65-year-old Stefan Wikberg told The New York Times in December, using SMS and mobile card readers effectively helped him climb out of homelessness after losing his IT job. He sells magazines for Situation Stockholm, a charitable organization and his sales rose 30% once he went digital. “Now people can’t get away,” he said. “When they say, ‘I don’t have change,’ I tell them they can pay with card or even by SMS.”

As The Times goes on to write, churches and museums now prefer cashless payments and “at more than half of the branches of the country’s biggest banks, including SEB, Swedbank, Nordea Bank and others, no cash is kept on hand, nor are cash deposits accepted.”

This may all sound rather surreal to some, but for Swedes it's not only normal, but desirable.  “No one uses cash,” said Hannah Ek, a 23-year-old student at the University of Gothenburg. “I think our generation can live without it.”

Well Hannah, that's probably because most people if your "generation" don't understand exactly what it means to go cashless. This isn't all an effort to make life more convenient. You might ask yourself if there's any connection between your country's rapid shift towards cashlessness and the Swedish central bank's rapid descent into negative rates. You see, when you cannot withdraw any cash, the Riksbank can decide that banks should charge you for your deposits if the economy isn't moving along fast enough. In other words, you may not want to spend your money today, but if you cannot resort to cash, then what's to keep the bank from charging you 20% on your deposits in order to make you spend? Don't think too hard: the answer is "nothing." 

Removing cash removes the effective lower bound and then, central banks can centrally plan the entire economy unless and until people simply revert to a barter system. 

And remember, this phenomenon is spreading. Larry Summers has called for the abolition of the $100 bill and the ECB is all set to do away with €500 note (while apparently making a profit). 

But Sweden has run into a rather vexing problem in its relentless pursuit of cashlessness: old people.

"It's important to many older people to be able to use cash," Christina Tallberg, chairwoman of Swedish pensioners' organization PRO, told Swedish Radio earlier this month.

Now that could be because the elderly aren't particularly adept at using electronic means of payment or it could simply be that they are old enough and wise enough to realize when something is absolutely crazy - like removing legal tender and adopting negative interest rates. 

In any case, Ms. Tallberg isn't the only one who has noticed this "problem." On Wednesday, Financial Markets Minister Per Bolund told Bloomberg that Swedish banks shouldn't expect "to get completely out of the business of handling cash."

Why? Well because unfortunately, some citizens still use it "and will continue to do so." 

“Sweden is not yet a cashless society, and we don’t see that we will be in the foreseeable future either,” he said, adding that "some people have trouble using electronic payment methods, including those who are elderly or have disabilities, and we have to make sure the economy works for everyone, and that everyone can choose the payment method that they prefer."

This comes on the heels of comments by Riksbank governor Stefan Ingves who earlier today gave banks a slap on the wrist for removing cash from branches and suggested that Sweden should pass a law to force banks to provide cash services.

"Less than 5% of visits to our branches involves cash in some form," Swedbank counters. Of course when you don't hold any physical currency on hand, it's pretty hard for visits to "involve cash."

In any event, perhaps Ingves should reconsider begging lawmakers to force banks into holding cash. After all, rates are already at negative 55bps. Any lower and the country's banks will have to start passing the cost onto depositors who will then begin demanding physical currency and curtailing the Riksbank's ability to plunge further into NIRP.

After all, there's another solution. Sweden could just ban old people.