http://news.yahoo.com/sweden-cash-king-no-more-082544562.html
Sweden was the first country to introduce the bank note in 1661, now it will be one of the first countries to take them away. Banks have begun conducting all money transactions electronically and rarely handle cash. The positive is that there is more transparency when looking at public and private finances, which makes it harder to avoid paying taxes and participate in the shadow economy. The negatives are cybercrime which is a very real and dangerous threat to using an entirely electronic monetary system.
What do you guys think of this? Is this a global trend, will other countries like the US do the same?
6 comments:
In the issue of adopting electronic cash, the Anglo-Saxon economies (i.e. Britain, U.S.,Australia, New Zealand) are more cautious than the European economy, so it is understandable that Sweden will be the first country to be cashless. Cybercrime can be prevented by advanced technologies, but people may well still not believe in the new technology. Moreover, monetary policy concerns such as how to control the bank's reserve rate exist. Difficulties in counting the money supply can also happen with electronic cash.
I think the move towards electronic money is an inevitable one. It only stands to reason that nations and institutions around the world will begin adoption of more electronic money practices to ensure greater control and accuracy of information in the market.
I honestly see this as the way of the future, and it probably won't be too long before many other countries start to follow suit. The introduction of debit and credit cards into societies was the starting point, and less and less people carry actual cash with them these days. It also costs more to produce coins than they are worth, so a cashless society could save on those costs. I think it would be met with some opposition though from the elderly.
Just like we have counterfeit bills, there will be numerous attempts to cheat the cyber money system.
I am however curious to see how they will solve the issue of currency exchange, especially for tourists. I can imagine that everyone will need a compatible card (Maestro I believe) with extremely high security level, hence costly. Thus tourists visiting the country for a few days would then be discouraged from visiting due to difficulty in transaction.
The substitution of electronic transition for paper notes has been a hated topic for a few years. In my opinion, in a short term, this transition still faces tough challenges like mentioned in the article; Cybercrime could be a very real and dangerous threat to consumers and the banking system. In a long term, I think it possible that the electronic transitions will eventually replace the current paper notes. It is actually a natural trend that happened again and again in the history; for example, the currency was made of gold, and other metals before the using of paper notes.
Will this lead to increased credit debt, as consumers will not have a physical reminder of the funds they actually have? Its not inevitable but how does the new system plan on avoiding this?
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