A Cash Free Society? Sweden Leads the Way

A Cahs Fre Society? Sweden Leads The WayHard metal in the hand or virtual numbers on a card, money is what people agree that it is. And now, as Sweden moves quietly toward a cash-free society, the very nature of money – and what it means – could be forever changed.

Sweden has long been in the vanguard of cultural shifts. Its free and easy attitudes toward sex, marriage and marijuana are almost stereotypical. Now, according to a new article from Business Insider, Sweden may be on the leading edge of another revolution – making the shift from hard money to electronic transactions.

In 2013, four out of five monetary transactions in Sweden were conducted electronically, either by electronic transfers or swipes of credit, debit and other kinds of cards. That preference for electronic transactions has led to some unlooked-for consequences. ATMs and other cash-dispensing terminals are becoming few and far between. And armed robberies are rare, since there’s no cash to steal. Bank robberies in particular are at a 30-year low.

In Sweden, everybody accepts cards, prompting one academic to claim that in 20 or 30 years, the whole country could be virtually cashless. That’s a shift caused by cultural preference, not government decree. Anyone in Sweden is free to carry cash and use it – but the trick is finding places that do cash transactions.

Sweden’s quiet slide into cashlessness has people worried: Swedish natives, who claim that cash is a basic human right; Christian conservatives who see a cash free world as a sign of the end times, and financial experts who raise concerns about whether a completely cash free society could be viable – and what that means for other kinds of monetary experiments like the Bitcoin.

Throughout human history, money has had many identities. From the goats handed over in exchange for a daughter’s hand to the gold coins minted by a royal bank, currency has evolved from simple barter to an complex structure represented by symbols on paper and metal. Physical money was always easy to carry and largely anonymous.

But the rise of the credit card changed all that. You could use a card to hold all your money – and even money you didn’t have. Transactions were quick and easy. Ecommerce took the process a step further, with one click online shopping and more. And as more and more businesses and institutions began to accept online payments or payments with cards, cash started to look a little inconvenient and maybe old fashioned.

What’s more, cash costs money to produce, store and manage – costs that are largely irrelevant to the digital world. In Sweden, for example, cash handling costs have plummeted in the last five years, since e-transactions gained such popularity.

But some financial expert worry that over-reliance on electronic money in all its forms could have serious consequences. And civil libertarians worry about the toll taken on privacy.

Going cash free in Sweden – or anywhere else, for that matter – depends on having access to things like computers, electronic banking and credit. For those who don’t have those things, cash is the only option. That locks these individuals out of many services and transactions that depend on the electronic movement of money.

For those who can function without cash, there are other problems. As the world has seen again and again, virtually any database can be hacked, leaving users’ personal and financial information vulnerable to identity theft by people halfway around the globe. And if a major event such as a natural disaster or terrorist attack takes the nation’s power grid offline, the economy of such a cash free country could be plunged into chaos.

In a global world, cashless societies face challenges too. People traveling outside the country would need cash – and so would those conducting business in places that rely heavily on hard money.

And then there’s the privacy issue. Cash has always been the currency of choice when transactions need to be private – for reasons both innocent and criminal. Just about any electronic transaction can be traced back to the parties involved.

Those concerns fueled the development of the Bitcoin – a digital hybrid that promised the convenience of cashless transactions with the anonymity of cash. All it takes is for two parties to agree to conduct a transaction in Bitcoin – a nod to the earliest systems of money.

In most of the world, though, cash is still king. And there’s no law in Sweden or I other countries against using it. Sweden’s tilt toward cashlessness reflects a desire for convenience and economy, not a government mandate. But the trend reveals a new social experiment that pushes the boundaries a little further – and forever changes the way we think about money and the way it works. (Top image:Flickr/DanJ)

Farquhar, Peter. “Sweden is Going to Be the First Country in the World Completely Free of Cash.” Business Insider Australia. businessinsider.com 13 Oct 2014

Read more from The American Monetary Association:

US Dollar Rides High in World Markets

Do Borrowers Need Banks?

The American Monetary Association Team



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