Sweden to Begin Trials for State-Backed Traceable Electronic Money

A women puts Swedish Crowns banknotes into her wallet in Stockholm in a file photo. Jonathan Nackstrand/AFP/Getty Images

STOCKHOLM—Sweden’s central bank will start trials next year for an electronic currency that could be used for payments between individuals, without involving credit cards or bank accounts.

The initiative from Riksbanken, Sweden’s central bank, is a response to the rapid abandonment of cash in Sweden in the past decade. Swedes, who have a reputation for quickly adopting new technologies and trends, are generally positive toward using cards or apps, but there is also a movement to keep cash as a safe and easily available option for payments.

Trials for a prepaid, traceable, non-interest version of the electronic currency, called “e-krona,” may begin as early as 2019, according to a recent report. While no decisions have been made to introduce the e-krona, Riksbanken says it’s necessary to investigate its possibility, based on cash’s current downward trend. In the report, the central bank says it may become difficult for Swedes to have access to a method of payment guaranteed by the state, which would increase people’s dependency on the major banks and credit card companies.

Swedes increasingly have turned to payments by card or app. While cash payments accounted for 40 percent of all commercial transactions in 2010, by 2016, that dwindled to 15 percent. Two out of three Swedes say they get by without cash and prefer cards even for small transactions, Riksbanken said.

Swish, the main mobile payment app in Sweden, allows for payment between individuals, but is connected to a bank account. It has been hugely successful since it’s introduction in 2012, both for individuals and businesses. In 2017, the version for individuals had more than six million users in a country of 10 million people, and app payments are now about as common as cash payments in Sweden, according to statistics from Bloomberg.

Race to a Cashless Society

But the rapid disappearance of ATMs and banks’ increasing reluctance to handle payments, deposits, and withdrawals of cash, has also led to protests. Seniors, who may not be as technically savvy, as well as people who (voluntarily or not) rely on cash, are finding it increasingly difficult to handle their day-to-day financial necessities.

Songwriter and ABBA member Björn Ulvaeus is one of the few public figures actively promoting a cashless society in Sweden. The ABBA museum in Stockholm has always been cashless, and Ulvaeus believes that removing cash would, among other things, have a positive effect on crime. In a 2017 article in the Expressen newspaper, he asked what a thief who’s stolen a watch would do with it in a cashless society, where all payments are traceable.

“Not even a fence who would accept stolen goods and pay with a pile of cash would be interested anymore. So what would the thief do with the watch?” he wrote.

In a reply at the site News55, former National Police Commissioner Björn Eriksson, founder of a movement called Kontantupproret ("Cash rebellion”), said that the thief would simply trade the watch for another item of value or use other currencies.

Kontantupproret advocates for moderation in the current race toward a cashless society. Aside from the negative effects for people who prefer or are forced to handle cash, safety issues are also often cited.

Eriksson said in his response to Ulvaeus that he’s not opposed to the technical advances, but rather “the naivety with which we rush into a completely digital society, and without consideration prepare to trash robust alternatives which may be vital in times of crisis.”

“Why would anyone […] bother to invade [Sweden] if it’s enough to use technical means to disable our payment system?” he asked.