Sweden Tries to Halt Total Cashlessness With Lawmaker Proposal
Sweden Tries to Halt Total Cashlessness With Lawmaker
Proposal
By Amanda Billner, Niklas Magnusson and Rafaela Lindeberg
11 June 2018, 8:34 AM 10 June 2018, 10:35 PM
(Bloomberg) -- A key committee of Swedish lawmakers wants
to force the country’s biggest banks to handle cash in an effort to halt the
nation’s march toward complete cashlessness.
Parliament’s Riksbank committee, which is in the process
of reviewing the central bank law, proposed making it mandatory for banks to
offer cash withdrawals and handle daily receipts. The requirement would apply
to banks that provide checking accounts and have more than 70 billion kronor
($8 billion) in deposits from the Swedish public, according to a report.
The lawmakers said there needs to be “reasonable access
to those services in all of Sweden," and that 99 percent of Swedes should
have a maximum distance of 25 kilometers (16 miles) to the nearest cash
withdrawal. The requirement doesn’t state how banks should offer those
services, and lenders can choose whether to use a third party, machines or
over-the-counter services.
The move is a response to Sweden’s rapid transformation
as it becomes one of the most cashless societies in the world. That’s led to
concerns that some people are finding it increasingly difficult to cope without
access to mobile phones or bank cards. There are also fears around what would
happen if the digital payments systems suddenly crashed.
Swedes Now at Risk of Losing Access to Cash in Parts of
Country
"We believe that the continued development of access
to cash in society needs to take place in a controlled manner so that the
public’s and society’s need for cash is fulfilled," the committee said in
an op-ed in Dagens Nyheter.
The committee began looking at these issues amid worries
that cash was disappearing too fast. A majority of bank branches in Sweden have
stopped handling cash over the counter, and many shops and restaurants are also
rejecting physical money. Still, a recent Riksbank study showed that the
decline of cash is driven by the fact that Swedes prefer using electronic
payments such as debit cards and mobile payments.
The Swedish Bankers’ Association said the plan would
violate European Union laws on state aid and competition by forcing only a few
banks to guarantee the supply of cash.
"To introduce a legal requirement where a few banks
will be forced to manage cash supply in the country is legally very doubtful,
as the same requirement isn’t placed on the other banks and other companies in
the cash handling chain, such as retailers and cash-in-transit companies,"
Hans Lindberg, the association’s director general, said in a statement.
Costs Vary
The proposal will result in “significantly increased
costs” of as much as 100 million kronor a year for banks and customers,
according to the group. The report also fails to mention that Riksbank now only
has one cash depot left after closing 23 facilities, which has hampered the
private sector’s cash usage, the group said.
The report puts the total costs for the six affected
banks at 8 million kronor to 15 million kronor a year.
While Financial Markets Minister Per Bolund in April also
questioned the legality of forcing banks to handle cash, in an interview on
Monday he said there was "strength" in the proposal since it’s backed
by all the parties in parliament.
He declined to say whether the government would support
the proposal, which will now be sent out on a consultation round.
Raising Ambitions
Riksbank Governor Stefan Ingves has expressed concerns
that the lack of cash may become problematic in a crisis situation, and
suggested new legislation to safeguard public governance of the payment system
as well as introducing a digital currency. He has also suggested forcing banks
to handle cash, a view now shared by the Riksbank committee.
"The large banks have a special responsibility for
the access to cash in society," given that they are central as providers
of payments and credit, the committee said. "It’s therefore not reasonable
that they can completely renounce the responsibility to handle cash, especially
against the background that it’s a legal means of payment."
The proposal means "raising the ambition level"
somewhat compared with the current accessibility of cash in society, it said.
If the requirements are not met, banks will face economic sanctions, whose size
will depend on how large the bank is and on how much it contributes to access
to cash, the committee said.
Cash handling company Loomis AB said the plan was “a step
in the right direction.”
“The proposition aims to secure outflow of cash in
society,” Patrik Andersson, chief executive officer at Loomis, said in an
email. “We also want to see a proposal that all players must accept cash as
well. It’s a legal means of payment and should be accepted by all. It’s like
that in most countries, but not in Sweden.”
©2018 Bloomberg L.P.
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