Sweden's Riksbank Calls for Strengthening Cash Use and Preparing for Digital Currency

According to Bloomberg, Sweden's central bank, the Riksbank, has called for strengthening the use of cash in the country, as well as preparing for the potential introduction of a digital central bank currency. The Riksbank's statement comes as the use of physical money in Sweden has dropped significantly, with only 8% of Swedes using cash for their latest purchase in a physical shop, according to a 2022 survey. This is a decrease from 33% a decade earlier.The rapid decline in cash usage has led policymakers to consider the need for safeguarding cash transactions and exploring the possibility of a digital central bank currency. A government-appointed inquiry earlier this year recommended ensuring that certain goods, such as prescription drugs, can be paid for in cash. However, the inquiry did not find strong enough arguments for legislation requiring grocery stores and fuel stations to accept cash payments.In response, the Riksbank argued that the obligation to accept cash should be extended to cover food, fuel, and a wider range of pharmacy products, as cash would initially be the only viable means of payment in the event of a power and telecommunications outage. The central bank also criticized the inquiry for not proposing legal changes necessary for issuing a digital currency, known as the e-krona.The Riksbank emphasized the need to start legislative work immediately to prepare for the introduction of a digital currency, as Sweden should be able to follow the European Central Bank's lead without unnecessary delay if it launches a digital common currency. 'We need to prepare ourselves for the future,' said Riksbank Governor Erik Thedeen. 'An e-krona could be part of the future payment market, for instance in light of the ongoing work on a digital euro.'