Cash money on its way to extinction?

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by Björn Schöpe

April 10, 2012 – Graft, bank robberies and thefts, lack of small change. There are many problems one might associate with cash money, and some people do. Especially in Sweden as it seems, since the high tech country has been elected for the second year in a row on the top position in the Global Information Technology Report. It indicates the intensity of integrating information and communication technologies in the national economies. In Sweden cash money is used less than elsewhere. Only 3 percent of the Swedish economy is represented by bills and coins any more, the EU average being at 7 percent.

Paying with cards is now even possible in some churches because people do not carry cash with them any longer. These are facts. But how to valuate them?

Experts esteem graft being intrinsically connected with cash money. “If people use more cards, they are less involved in shadow economy activities,” says economics professor Friedrich Schneider of the Johannes Kepler University in Austria. And in Sweden bank robberies actually have dropped from 110 in 2008 to 16 in 2011.

On the other hand cybercrime is increasing and will find new possibilities when digital payment methods will become more used. Hence the hope of getting rid of criminality connected with money seems quite naïve. Criminals will adapt other methods, criminality will not take place in bank buildings and on the street but on the field of bits and bytes.

Naturally privacy is another huge problem when all transactions are stored and traceable – this is not only for the benefit of fighting graft and illegal money laundering.

And of course there are those members of our society who do not possess credit cards or do not know how to use them, especially elder persons in rural areas. „There are towns where it isn’t at all possible anymore to enter a bank and use cash,“ complains Curt Persson, chairman of Sweden’s National Pensioners’ Organization.

Nobody knows how cash money and its use will develop, whether in some decades it really will still survive but only “like the crocodile, even though it may be forced to see its habitat gradually cut back”, as Lars Nyberg stated some time ago, the ex-deputy governor of Sweden’s central bank. However, observing Sweden we will learn how things might change in the rest of the world somewhat later. And maybe we can react – or even prevent – certain developments.

You can read an article on this subject here.