Sweden and Norway, two of the world’s most cashless societies, are reconsidering their shift away from physical currency due to rising cybersecurity concerns. Both countries have witnessed a dramatic decline in cash usage, with Sweden reporting that only 10% of transactions are made using cash. While mobile payment systems like Swish have gained popularity, authorities are now advocating for cash retention as a safeguard against digital vulnerabilities. The recent focus on potential cyber threats, including concerns about Russian cyberattacks, has prompted officials to reassess the risks associated with a fully digital financial system.
A few years ago, discussions around cashless economies in Sweden and Norway largely emphasized efficiency and convenience. Sweden’s central bank had even been developing its own digital currency, the e-krona, as part of its digital payment strategy. However, recent concerns about digital payment security have taken precedence, leading to a shift in priorities. Unlike initial predictions that cash would become obsolete, officials are now acknowledging the need for a backup system in case of digital disruptions.
Why Are Authorities Now Promoting Cash?
Norwegian legislators are considering laws that would penalize businesses for refusing cash payments, ensuring that physical currency remains an option for consumers. Additionally, officials have recommended that citizens keep cash on hand to prepare for potential cyber incidents that could disrupt digital transactions. Emilie Mehl, Norway’s former justice and emergencies minister, emphasized the importance of maintaining cash accessibility, stating,
“If no one pays with cash and no one accepts cash, cash will no longer be a real emergency solution once the crisis is upon us.”
How Is Sweden Addressing Digital Payment Risks?
Sweden’s defense ministry has also issued guidance on preserving cash availability in case of crises. A pamphlet published in November highlighted the shift in focus from efficiency to security, stating,
“Measures need to be taken to strengthen preparedness and reduce exclusion so that everyone can pay, even in the event of crisis or war.”
The Swedish central bank, which had been actively exploring the e-krona, is now more focused on monitoring global central bank digital currency (CBDC) developments rather than pushing forward with its own initiative.
Beyond Scandinavia, digital currencies are facing uncertainty in the United States. U.S. policymakers are debating legislation that could ban the development of an American CBDC. Representative French Hill expressed opposition to a government-controlled digital currency, arguing,
“Unlike stablecoins, which operate in a competitive market, a CBDC would concentrate financial power within the federal government, restrict consumer choice and undermine the innovation that has made U.S. financial markets the strongest in the world.”
Meanwhile, Representative Maxine Waters criticized such restrictions, asserting,
“[This regulation] is not only anti-innovation, but also anti-American as it helps China win the digital currency ‘space race’ and undermines the U.S. dollar as the world’s reserve currency.”
The debate over cashless societies highlights the balance between technological advancement and financial security. While digital payments offer convenience, complete reliance on them carries risks, particularly in the face of cyber threats. Sweden and Norway’s reassessment of their cash policies signals a broader concern about the resilience of digital financial systems. Policymakers worldwide may need to consider similar precautions to ensure payment accessibility in emergencies.
