Sweden enjoys marketing itself as a sort of “society of the future” and so is quick to embrace new, extreme, or odd trends in comparison to the rest of the world. One of these trends has been to push for the elimination of physical cash as a form of payment which is set to overtake most of the country by 2025:
Few countries have been moving toward a cashless society as fast as Sweden. But cash is being squeezed out so quickly — with half the nation’s retailers predicting they will stop accepting bills before 2025 — that the government is recalculating the societal costs of a cash-free future.
The financial authorities, who once embraced the trend, are asking banks to keep peddling notes and coins until the government can figure out what going cash-free means for young and old consumers. The central bank, which predicts cash may fade from Sweden, is testing a digital currency — an e-krona — to keep firm control of the money supply. Lawmakers are exploring the fate of online payments and bank accounts if an electrical grid fails or servers are thwarted by power failures, hackers or even war.
“When you are where we are, it would be wrong to sit back with our arms crossed, doing nothing, and then just take note of the fact that cash has disappeared,” said Stefan Ingves, governor of Sweden’s central bank, known as the Riksbank. “You can’t turn back time, but you do have to find a way to deal with change.”
Ask most people in Sweden how often they pay with cash and the answer is “almost never.” A fifth of Swedes, in a country of 10 million people, do not use automated teller machines anymore. More than 4,000 Swedes have implanted microchips in their hands, allowing them to pay for rail travel and food, or enter keyless offices, with a wave. Restaurants, buses, parking lots and even pay toilets depend on clicks rather than cash.
Consumer groups say the shift leaves many retirees — a third of all Swedes are 55 or older — as well as some immigrants and people with disabilities at a disadvantage. They cannot easily gain access to electronic means for some goods and transactions, and rely on banks and their customer service. And the progress toward a cashless society could upend the state’s centuries-old role as sovereign guarantor. If cash disappears, commercial banks would wield greater control.
“We need to pause and think about whether this is good or bad, and not just sit back and let it happen,” said Mats Dillén, the head of a Swedish Parliament committee studying the matter. “If cash disappears, that would be a big change, with major implications for society and the economy.”
Urban consumers worldwide are increasingly paying with apps and plastic. In China and in other Asian countries rife with young smartphone users, mobile payments are routine. In Europe, about one in five people say they rarely carry money. In Belgium, Denmark and Norway, debit and credit card use has hit record highs.
But Sweden — and particularly its young people — is at the vanguard. Bills and coins represent just 1 per cent of the economy, compared with 10 per cent in Europe and 8 per cent in the United States. About one in 10 consumers paid for something in cash this year, down from 40 per cent in 2010. Most merchants in Sweden still accept notes and coins, but their ranks are thinning.
Among 18-to-24-year-olds, the numbers are startling: Up to 95 per cent of their purchases are with a debit card or a smartphone app called Swish, a payment system set up by Sweden’s biggest banks.
Ikea, whose flat-box furniture is a staple of young households, has been experimenting to gauge the allure and effect of cashless commerce. In Gävle, about 100 miles north of Stockholm, managers decided to go cashless temporarily last month after they realized that fewer than 1 per cent of shoppers used cash — and Ikea employees were spending about 15 per cent of their time handling, counting and storing money.
Patric Burstein, a senior manager, said the cashless test had freed employees to work on the sales floor. So far, around 1.2 of every 1,000 customers have been unable to pay with anything but cash — and mainly in the cafeteria where people tend to spend change. Rather than bother with bills, Ikea has been offering those customers freebies.
“We said, ‘If you want a 50 cent hot dog, be my guest, take it. But next time maybe you can bring a card,’” said Burstein, 38. The test so far suggests that cash is not essential and, instead, may be costly, he said. “We’re spending a lot of resources on a very small percentage that actually need the service,” he said.
The nearby branch of the Swedish National Pensioners Organization has led protests against the experiment, in part, because many retirees like to go to the Gävle Ikea for a bite to eat.
“We have around 1 million people who aren’t comfortable using the computer, iPads or iPhones for banking,” said Christina Tallberg, 75, the group’s national president. “We aren’t against the digital movement, but we think it’s going a bit too fast.”
The organization has been raising money to teach retirees how to pay electronically, but, paradoxically, that good effort has been tripped up by an abundance of cash. When collections for training are taken in rural areas — and the seniors donate in cash — the pensioner in charge must drive miles to find a bank that will actually take the money, Tallberg said. About half of Sweden’s 1,400 bank branches no longer accept cash deposits.
“It’s more or less impossible, because the banks refuse to take cash,” she said.
Banks have propelled the cashless revolution by encouraging consumers and retailers to use debit and credit cards, which yields banks and credit card companies lucrative fees. That includes the bank-developed Swish smartphone app.
Sweden’s banks have cut back on cash in part for safety reasons after a rash of violent robberies in the mid-2000s. The national psyche is marked by an infamous helicopter heist in Västberga in 2009, when thieves landed on the roof of a G4S cash service depot and stole millions — a drama now being turned into a Netflix film. Last year, only two banks were robbed compared with 210 in 2008.
In recent years, banks have dismantled cash machines by the hundreds. So little cash is used now that it has become expensive to track and maintain, said Leif Trogen, an official at the Swedish Bankers’ Association.
There are two proposals by Swedish authorities to keep cash at hand. Parliament wants just the biggest banks to handle cash. The central bank is holding out for all banks to keep money flowing. Swedbank, SEB and other big Swedish financial institutions are fighting the lawmakers’ demands, saying it would place an undue burden on them to provide greater access.
“The demand for cash is decreasing at an ever faster pace,” Trogen said. “Therefore, it is fundamentally wrong to legislate to influence the demand for cash.”
The central bank has plans to roll out a pilot version next year of a new type of Riksbank money — the digital krona, or e-krona — that could replace physical cash or at least help calm the current cash conundrum. An e-krona would mean that the functions of a currency backed by the state would remain, even in an all-digital world that is fast approaching.
Christine Lagarde, managing director of the International Monetary Fund, noted last week that several central banks were “seriously considering” digital currencies.
“While the case for digital currency is not universal, we should investigate it further — seriously, carefully and creatively,” she said.
The elimination of cash from society is highly dangerous for many reasons, but the clearest one is that is it the final disconnect between a unit of value as a means of exchange between the real and the nonexistent.
Money is a means to represent real value as, historically speaking, based on what a culture regards as something having intrinsic value. Some cultures use gold, some shells, some even pieces of wood, but the idea is that real value is bound to a physical object of some kind, and that if a culture adapts a “standard” of value, that standard can be represented legitimately in a form that is lighter, easier to carry, and more adaptable to various circumstances.
In the USA, the dollar was said to be on the “gold standard.” The precious metal gold and silver were the standard of value, and the dollar is the representation of a said value of gold, printed on the face of the bill. This is why on the old bills, while being issued by the Federal Reserve Bank said “silver certificate” at the bottom:
A bill from 1935. Note the writing at the bottom.
The Federal Reserve Bank has always been an issue because, to describe it briefly, it is a private bank who prints money for the government and then charges the government interest on the money they print. The bank itself is a scam because as they control the printing of money and for each dollar they create a dollar of debt is added to the Federal Government, the fact that they charge interest on the money means there is no way to pay the government’s debt to the bank. It does not matter how hard somebody works or how much money a man makes because there is not enough money that exists to pay the debt. Some people may and will be able to pay their debts, but some people will not be able to, not because they are malicious or do not work hard enough, but because there is not enough money in existence to pay it.
The connection of the Federal Reserve issued dollar to a precious metals standard, while it does not stop the debt issue, was able to in part control it because they value of the currency was tied to a physical object. During the Nixon administration, the US dollar was removed from the Gold Standard and made into a purely “fiat” currency, meaning in the American context that not only was the dollar printed by the will of the Federal Reserve as it already had been doing, but that now the value of the dollar was no longer tied to a metal but to the “faith” in the US government and her ability to service her debts. This was doubly a scam because the government could never pay her debts in reality, but it gave the perception of stability and having loosed the dollar from her restraints to a physical commodity allowed for the massive expansion of credit and debt, and is a major reason why the US dollar has lost such a tremendous amount of value since that time:
This massive credit expansion has given way to the gross overvaluing of commodities or market segments, causing instabilities that later forcibly decline in value in order to “correct” their overvalue. These are known as “bubbles,” and they can be seen in the stock market, technology, housing, automobiles, and manufacturing. Currently there is grave concern the US is facing another housing bubble similar to what happened a decade ago that caused a major economic decline.
Many wonder why the economy is not improving, and the simple reason is because of the debt. The US economy’s “dead cat bounce” situation exists because people are saturated with too much debt, and because some of that debt (i.e. student loans) cannot be discharged in bankruptcy, the cycle of a slow but progressive economic decline continues unabated, with only periods of “increase” on the way down.
The way to solve the monetary problems is ultimately to deal with the debt-based currency, and no politician wants to discuss this because it would be the end of his career. The last politician to seriously put forward a move to deal with the matter was President Kennedy, and his presidency ended in death.
But as far as individuals are concerned, since the system is NOT going to be abolished by any politician at any time in the future so far, it is for the individuals to protect himself. Cash, while it is still a note of debt to the Federal Reserve and its value can certainly reach the worthlessness of the paper on which it is printed, it is still a physical connection to a semblance of real value (I say semblance because the currency is based on nothing but the credit of the government, but said cash can still be exchanged for goods that possess intrinsic value).
The movement away from cash in physical form to purely electronic is highly dangerous because paper is real but an “electronic bank” is just numbers held in electromagnetic storage on a server somewhere. Without electricity, or without a battery, those numbers do not exist because there is no power to verify their existence. Likewise, if another person or more dangerously, government were to seize for whatever reason one’s electronic account, all of one’s assets are lost, and at nothing more than the press of a button. However, one cannot seize paper cash unless one sends a physical person to come and take the cash by hand.
Now let’s consider a scenario.
Say that a person says something that is considered socially inappropriate in the future. It does not matter who the person is, or even what he says, but the fact that whatever was said is not considered acceptable by the standards of cultural behavior. Given the tendencies of totalitarianism in all governments and increasingly so in the formerly Christian world turned now pagan, all one needs to do is to press a button and said person is unable to buy, sell, or conduct any financial business because he is restricted from access to his funds.
It is the dream of every dictator and psychopath with control issues to have, and it is the fear of so many writings in science fiction and other futuristic dramas about what may happen to man in the future if he were to embrace such technologies.
This is happening in Sweden now, but two major nations to watch with this are China and India, the former which as promised to implement a “social credit system” by 2020 to monitor all citizens, and the latter of which has already marked the biometric data on national ID card of almost all of her over 1 billion citizens.
There are already signs of this in the USA, where cash is becoming a rarer medium of exchange.
When this form of payment becomes popular throughout the world, and the idea of any sort of financial privacy at all is no more, then one should watch and be very careful, for it would not take much to make it impossible to buy or sell anything without an additional “modification”…