When cash disappears from the world, January 24 at 18:50

Cashless payments are spreading rapidly in Japan. On the other hand, there are some places that are more advanced worldwide. Scandinavia and Sweden are the leading figures. Cash circulation has fallen to just over 1% of the country's economy (Japan is about 20%). There, the central bank is seriously discussing how to prepare for a "cash-free world." (Naoko Kawase, Economics Department Reporter)

One week of “no cash”

I visited Stockholm, the capital of Sweden, for interviews in mid-December, when the city was busy for Christmas. I believed in the local coordinator saying "I don't use cash" and tried to get into the currency krona without any exchange. I felt a little anxious.

However, there is actually no problem. At convenience stores in airports, restaurants in the city, ticket vending machines at stations, etc., there were devices for smartphone payments and credit card readers as usual, and it seemed that they were only expecting to receive digital money.

In Japan, credit card readers were fixed in the "cash tray" area, which is often next to cash registers, and it was common to be surprised that customers would insert their own cards.

At the restaurant, there was a place where "Cash NG" was written next to the cash register. Whether it's a paid toilet in a department store or a small shop in the Christmas market, digital money is everywhere. During my week-long interview, I never felt inconvenienced by lack of cash.

For smartphone payments, 70% of the people use an app called “Swish”. Swedish bank jointly developed with an IT company to make it easy to transfer money from your bank account to your partner's account using QR codes and their phone numbers. And there are no commissions to be paid by individuals.

It began in 2012, but has grown rapidly in recent years and has contributed significantly to the Swedish "no cash" movement. In fact, a small store has a QR code for "Swish" on the storefront, and many people are shopping with the app.

When I asked one of our female customers when they recently spent their cash, they closed their eyes and replied, "I don't remember, very old!"

Behind the convenience ...

Are there any issues with rapidly moving away from cash?

When asked to local people, there is still a problem that people in their 80s and over cannot use smartphone apps. Not only that, to use "Swish", you need a "Bank ID", which is linked to a local bank account, to identify yourself.

For this reason, people who have traveled or have just emigrated from other countries are currently unable to use it.

There are also issues on the shop side. One problem, according to Guido Carinci, chairman of the local economic body, is communication problems.

In only cities, radio waves are crowded during busy hours such as weekends, and smartphone payments may not be possible. Many people don't carry cash, so if a communication failure occurs, sales will suffer.

Another challenge is the cost of cash management. The use of cash is decreasing, but not zero. For this reason, the store needs to manage the sales amount. However, many banks have "non-cash branches" and say they need to go to a remote branch to deposit cash.

A private security company has begun a service in which cash is transferred to a designated account on behalf of the store, but of course a fee is charged. The cost of keeping cash is worrying.

When cash runs out, the central bank

How should the central bank fulfill its mission as a "keeper of currency" in the rapidly evolving "cash-out" trend? Rixbank, Sweden, the world's oldest central bank, more than 350 years old, has begun discussions.

What is being considered is the issuance of the digital currency "e-krona".

Bjorn Sögendorf (Senior Advisor, Central Bank Settlement Department)
"In Sweden, the number of cash users is decreasing and we are now moving towards a" complete cashless society. "We are facing that reality. You can do it, but what if you have a cashless society? That question was the starting point. "

That's what Bjorn Sögendorf, a key member of the eKrona project, launched in 2017.

The aim is to make money guaranteed by the state accessible to everyone in the digital money era. Each citizen is seeking various options, such as opening an account at the central bank.

Impatience for Libra

What spurred the discussion of e-cloner was the "Libra" concept launched by Facebook in June last year. Digital money that aims to be issued with multiple fiat currencies such as the dollar, euro, and yen.

Zuckerberg claims that 2.7 billion users, or about one-third of the world's population, will be able to "send money as if sending photos."

However, if the use of “Libra” expands and the people do not exchange to legal tender, the money that does not go through the central bank will increase. This has raised concerns that monetary policy in each country may be ineffective.

Last November, after the Libra initiative was announced, the Swedish central bank named Facebook, Google and Amazon in a report saying, "We have a dominant position because of our large customer base. It may be ". He expressed concern that giant IT companies would take control of the initiative.

Bjorn Segendorff: "If a global payment system is dominated by one or two large corporations, it could threaten democracy. The only way to protect digital money that is usable and risk free is to be led by a central bank. There is no. "

How can it be used in a disaster? What is the impact on the financial system? How will the privacy of the people be protected if the flow of money is digitized and the nation takes over the information? Given these challenges, the Swedish central bank is soliciting technical suggestions from private companies. In the meantime, he wants to show the public the prototype of the e-cloner.

What you can learn

Cashless payments are rapidly spreading in Japan. It is convenient for users to avoid having to carry cash. In addition, it has the potential to help solve structural issues in the Japanese economy, such as countermeasures for labor shortages at stores.

On the other hand, when we look at the Swedish scene, there is also a question that "If we pursue convenience for many people, it might be inconvenient for those who are left behind." I think Japan has much to learn about the future of Swedish money.

Economic Department Reporter
Naoko Kawase Joined in 2011 Joined Niigata Bureau Sapporo Bureau Currently in charge of information and communication industry