Norway following Sweden into reduced cash (credit card, fees, sued, transaction)

[PacoMartin]

2007 Sweden peaked in banknotes in circulation and then dropped by the following yearly amounts relative to 2007

1. -2.07%
2. -4.45%
3. -8.70%
4. -13.31%
5. -16.09%
6. -26.01%

2012 Norway peaked in banknotes in circulation and then dropped by the following yearly amounts relative to 2012

1. -1.88%
2. -2.98%
3. -1.67%
4. -3.56%
5. -8.52%
6. -15.15%

So far these are the only two countries that are consistently reducing the value of banknotes in circulation. But since Denmark is increasingly using cashless payments, they are expected to join Sweden and Norway.

Iceland was the first country to go nearly cashless in the mid 1980s, but since all the banks went bankrupt in one year, cash has made a comeback in the country.

Checks were rarely used in Sweden after a 15kr ($1.80) fee was implemented in 1990, and checks are not accepted in that country for decades. Checks are now vanishing from a number of countries including Poland.

However while it seems as if every country is looking in the possibility of the elimination of banknotes as a payment instrument, no country (including Sweden and Norway) has a timeline or even a stated goal.

Even Sweden may be having second thoughts as the 500kr banknote (the primary denomination used in ATMs) has INCREASED in circulation in 2018, reversing a decade long trend.

Which is the next country to level off currency in circulation? Denmark, Canada, Australia, United Kingdom, China are possibilities.

South Korea will eliminate coins in three years, and the circulation of small denomination banknotes is bound to decrease as small purchases will increasingly be done electronically. But the circulation of the largest denomination banknote introduced in only 2009 is still increasing year over year and will probably continue to do so. Large denomination bills are more often used as a store of value and to protect privacy, as they are used for transactions.

[davebarnes]

I think it is a worldwide trend.
Not at the Swedish pace, but still a trend.
100s of millions of people all over the world are using phones to pay/transfer money.
100s of millions in the developed world are using credit cards more and more.

Personally, I have not used any cash in the USA in the last 13 months.
I did use some cash in España on vacation last Fall.

[PacoMartin]

Originally Posted by davebarnes

I think it is a worldwide trend.

Sweden and Norway are the only two countries actually reducing the amount of cash they have in circulation. Every other country is increasing cash and very often at a rate much higher than GDP growth.

While an increasing number of transactions are done electronically, the amount of high value banknotes are proliferating around the world.There are more $100 banknotes than either $20 banknotes or even $1 banknotes in circulation.

With the exception of Sweden all of these currencies have had banknotes and coins row relative to GDP over the 29 year period

Banknotes and coins in circulation in 1988: Value as a % of GDP
Canada 3.0%
United Kingdom 3.1%
United States 4.4%
France-EU 4.1%
Italy-EU 5.2%
Germany-EU 6.8%
Belgium-EU 7.5%
Netherlands-EU 7.7%
Sweden 5.5%
Switzerland 9.8%
Japan 9.5%

Banknotes and coins in circulation at end of 2017: Value as a % of GDP
Canada 4.3%
United Kingdom(2016) 3.9%
United States 8.2%
Euro area 10.7%
Sweden 1.3%
Switzerland 12.7%
Japan 20.4%

[FIREin2016]

This is the goal of revenue departments. All cash tracked and accounted for.

Just stand in line at a busy bank to make a transaction in the USA. Virtually everyone there in line is cashing a check(s). Nothing is deposited. Many people look like they are hard workers.

[TRlaura]

Originally Posted by davebarnes

I have not used any cash in the USA in the last 13 months.

I travel extensively for work and use cash more now than I did 5 years ago. When I see the cut a small independent business or restaurant takes when I throw a card at them, I no longer have the heart for using it.


And then their are tips for housekeeping and this and that. And a few bucks in the red bucket. How do you get around that?

[PacoMartin]

Originally Posted by TRlaura

I travel extensively for work and use cash more now than I did 5 years ago. When I see the cut a small independent business or restaurant takes when I throw a card at them, I no longer have the heart for using it.And then their are tips for housekeeping and this and that. And a few bucks in the red bucket. How do you get around that?

I am not advocating a position, just reporting.

Every country in the world is increasing cash in circulation, both in an absolute sense and as a percent of GDP. Scandinavia is unique in that each country has a phone app which over half the population uses. It is not compatible phone apps, it is the same app everywhere in the country.

Initially, Sweden was the only country which was actually decreasing the amount of cash in circulation starting in 2007. Norway has joined Sweden five years later. Denmark is still increasing the amount of cash in circulation but at a very low rate.

Advocates of cashless society think that problems of leaving tips, and overhead fees of using credit cards can be eliminated. Studies indicate that the cost of handling cash can be quite high. It has to be counted and recounted, guarded, and driven to someplace where it is deposited. Robbers can cost you an injury or even your life. Cash costs you time, as most people are familiar with picking something off a shelf in two minutes, and then it takes 10 minutes to pay for it.

The boldest experiment attempted so far will happen in South Korea in about three years. The government will demonetize all coins, and people can choose to keep them as souvenirs or deposit them in a bank.

Sweden is circulating about 20 banknotes and 60 coins per inhabitant. About 7 banknotes are of a denomination roughly $55 and are the mainstay of ATMs. Personally, I don't think they could go much lower, or the infrastructure of cash (ATMs, cash registers, armored trucks) will simply break down. Once a business starts doing 15% or less of its business with cash they often find that it is more efficient to not accept cash anymore and lose a little business but make up the loss with greater efficiency. The central bank in Sweden may be the first on in the world to issue central bank digital currency (CBDC) this year which will replace even more cash.

Sweden is circulating about 200 million banknotes (25% of which are a denomination worth about 2 Euros, which is a coin in most of Europe: Britain, Euro Area, Norway, Denmark, Switzerland). That is far too few banknotes to try and produce domestically. Right now they have a three-year contract with De La Rue in Britain to produce their banknotes with three one year options. When that contract runs out, the government may decide not to look for a follow on contract, and just let banknotes vanish like personal checks were eliminated in Sweden decades ago.

Interestingly enough all the countries in the current Euro Area had much less cash circulating in their native currencies. France and Finland were very low cash countries prior to the changeover. Poor countries like Greece and Portugal did not have high denomination banknotes. The largest banknote in eight countries that are now part of the Euro Area was worth in Euros

€29.35 : 10,000 Greek drachma
€34.17 : 20 Cypriot pound
€31.96 : 500 Estonian kroon
€41.73 : 10,000 Slovenian tolar
€46.59 : 20 Maltese lira
€49.88 : 10,000 Portuguese escudo
€60.10 : 10,000 Spanish peseta
€76.22 : 500 French franc


While the most widely circulated Euro banknote is the €50, the higher value banknotes have been used for drug and human trafficking, as well as other activities. But leaving aside criminal activity, it would have been nearly impossible to empty the Greek banks of all their cash with the drachma. First of all the value of each banknote was too low, and second of all it would have been much harder to change the money and ship it out of the country.

[PacoMartin]

Originally Posted by PacoMartin

Denmark is still increasing the amount of cash in circulation but at a very low rate.

Denmark reported today results for 2018, and they are now decreasing the amount of cash in circulation. It's only by 0.4% but they have joined Sweden and Norway in that they are the only countries going down.

Value of all banknotes in circulation per inhabitant at the present-day exchange rate
€479 Sweden with 6.6% in 1000kr banknotes worth €96
€753 Norway with 35.6% in 1000kr banknotes worth €103
€1488 Denmark with 48.6% in 1000kr banknotes worth €134
€3,555 Euro Area

Long before a country is a serious candidate to move towards cashlessness they have to give up checks (or cheques) and banknotes in circulation have to stop increasing. Then they begin to shrink by small percentages, and then by larger percentages for several years.

Sweden, Norway, and Denmark are relying less on their highest denomination banknote, the 1000kr banknote which is still widely circulating in Denmark but less and less so every year. Norway has not produced new ones since 2005.

Sweden, Norway, and Denmark have lost the ability to cost-effectively produce banknotes, and they are now made under contract in either France or Britain.

One aspect of cashless society seldom discussed is that modern machinery has produced much better counterfeiters. As a result, the design of banknotes that cannot easily be counterfeited is increasingly concentrating in a number of secure paper corporations. Small countries have to let contracts to these companies and undoubtedly are paying higher and higher prices as banknotes grow more elaborate. All three Scandinavian countries have issued new designs in the last decade which are produced overseas. There is some financial incentive to make this series their last.

[johnsmith5a]

And how are tourists supposed to get by?? They aren't thinking these things through. Stupid policies, screwed up countries. Why do they keep importing muslim animals into their countries?

[BMI]

Originally Posted by johnsmith5a

And how are tourists supposed to get by?? They aren't thinking these things through. Stupid policies, screwed up countries. Why do they keep importing muslim animals into their countries?

Agree. Unfortunately will come back to bite them.

[cmptrwlt]

The racism is alive and well.

Norway isn't going cashless anytime soon.