Sweden`s economy, which is at a world-beating cashless level, is planning to move to the next level as the pandemic has increased the online transactions and its notes and coins have reached the level of extinction.
According to Mr. Stefan Ingves, who is to the governor of Riksbank, some young Swedes have no idea what the real currency looks like anymore. The lawmakers need to step in before it’s too late as Sweden has less cash in circulation than anywhere else in the world.
There are plenty of benefits associated with moving to a cashless system. The issues like money laundering and tax evasion are reduced as the transparency increases in the system. Sweden has crossed its tipping point with the cashless economy. The issues like the cyber-attacks and failure of digital networks will result in more damage than the traditional crimes as there is no physical currency to fall back to.
In case of a failure of digital systems in the country, the need for physical currency is required for restarting the economy.
The current pandemic has led to exchanging physical currency perceived as a health risk and as a result, the country has completely shifted to a contactless payments system.
According to the estimates provided by a Swedish bank, the contactless card payments made by the customers before the pandemic was 63% which shifted to 73% as the coronavirus accelerated the trend.
According to the latest available data, Sweden has less cash in circulation than anywhere else in the world, which is 1% of the Gross Domestic Product. Sweden’s Riksbank has done advanced planning to figure out to stay relevant as the practical applications of the central bank are in question. The bank also does plan to ensure that Sweden`s citizens do not have access to real money suddenly.
The government needs to draft legislation that requires banks and businesses to maintain a minimum capacity of physical cash.
The contactless payment trend is seen worldwide. Globally, around 60% of the Visa transactions outside the U.S. are done with a screen tap, according to the card company.
The feasibility of issuing a digital currency is currently considered by Riksbank. The bank, earlier this year launched a pilot project to figure out the technology needed to enable the digital currency e-krona.