In Stockholm you can pay a street hawker with a credit card. In Helsinki, you can go grocery shopping leaving your wallet at home. In Copenhagen you can get a dose of espresso with your smartphone. Throughout Sweden, “No cash accepted” signs are a common sight at restaurants and stores. And now many of Swedish bank branches have stopped accepting cash.
However, in their quest to move to digital payments as quickly as possible, the elderly or lower-income Swedish who aren’t as digitally savvy as the younger citizens are facing problems. This group of people are unable to shop, buy food, perform banking transaction or even answer nature’s call. Yes, older Swedes were denied a visit to toilet because they only carry cash.
At a public toilet in a shopping centre in Gothenburg, a struggle took place between young and old citizens after the shopping mall installed cash-free toilets, forcing customers to pay with their mobile phones – a process new to most. While 28-year-old Freda could get in, 69-year-old Tilda was denied access to the toilet because she wasn’t technology savvy enough to pay using smart phone.
Still, that is not the biggest problem. There’s a fundamental flaw in a full-fledged cashless system. Call them a bunch of idiot or gullible fellows or whatever you like, but the Swedes presumed they can trust their government – forever. After all, the country was ranked 6th place out of 180 countries in the Transparency International’s 2017 Corruption Perception Index.
Then in February, the government dropped a bombshell. To the horror of supporters of cashless society, the head of Sweden’s central bank – Governor Stefan Ingves – warned that Sweden could soon face a situation where all payments were controlled by private sector banks. Mr. Ingves called for new legislation to secure public control over the payments system.
The Governor of the Swedish National Bank said – “Most citizens would feel uncomfortable to surrender these social functions to private companies. It should be obvious that Sweden’s preparedness would be weakened if, in a serious crisis or war, we had not decided in advance how households and companies would pay for fuel, supplies and other necessities.”
Suddenly, close to 10-million Swedes realize what an idiot they have been, putting all the eggs in one basket. The remarks and warnings from the Swedish central bank governor have brought up concerns and risks about a cash-free society. Even if they can trust their government, can they really trust the four major “private banks” that form the monopoly in Sweden?
Essentially, the Swedes will be at the mercy of the banks during economic uncertainty or crisis. In times of crisis, the general public who has alwayssought refuge in risk-free assets, such as cash, will not be able to do so simply because cash is outlawed. There will be very little flexibility or freedom on how they can protect their own money.
As a developed nation with a gross domestic product (GDP) per capita of US$46,420 (as of 2016), Sweden should know that no banking system is invulnerable to fraud or glitches. Hence, it would be naive to think we can abandon cash completely and rely on technology instead. It’s a matter of time before hackers get into the banking system and take everything away.
What will happen if Russian President Vladimir Putin invades Gotland (Sweden’s largest island] and turn off the payments system, the same way he could turn off the tap on gas supply to the European Union? The people of Sweden would suddenly lose everything because they had given up physical cash and fully depending on electronic money.
Last month, after the remarks by Governor of the Swedish National Bank, a poll showed unease among Swedes towards cash-free society. Almost 7 out of 10 said they wanted to keep the option to use cash, while just 25% wanted a completely cashless society. The Facebook data-harvesting scandal has also woken up Sweden about the vulnerable of technology.
In Sweden, banks create interfaces so other companies can directly access accounts once customers give their consent. However, such practice – called screen scraping – is unregulated in the country. So the whole financial system is a time bomb as it would take another Cambridge Analytica scandal to wreck havoc the Swedish cashless society.
– Finance Twitter