Payment Systems in a Cheque-less and Cashless Society

With Barbados preparing to get rid of cheques and reduce its use of cash, the Central Bank of Barbados and the Financial Services Commission invited the Deputy Governor Henry Ohlsson of Sveriges Riksbank (Sweden’s Central Bank) to give a presentation on “Payment Systems in a Cheque-less and Cashless Society” at their 10th Domestic Financial Institutions Conference. Sweden leads the world in this area.

Revealing that “I haven’t seen a cheque in Sweden for 30 years,” Ohlsson spoke principally of the implications of going cashless and of the steps Riksbank is taking to ensure that it remains relevant in an era where the majority of its country’s citizens use alternative payment methods and where many businesses and even some commercial banks no longer handle cash.

On the Advantages of Going Cashless

“There is an increase in the efficiency in the payments system. These things are really rapid and you don’t have to transport cash around the country. It’s more safe for the people working in shops with electronic payments rather than having large amounts of cash around. And the use of cards and instant payment systems has also reduced the shadow economy.”

On the Disadvantages of Going Cashless

“There will always be a proportion of the population that will have problems using digital solutions, and therefore when the economy goes cashless, you create problems for people…. You might also think about a situation where there is a severe crisis and the electronic systems will not work because of lack of electricity and things like that, then you probably would need to have cash…. And if you go into the electronic world, things are much easier to trace. Nowadays, all the transactions in Sweden – most, at least – are known to the big card companies and this is information that is valuable and also sold to interested advertisers.”

On Riksbank’s Response to the Move Away from Cash

“An alternative that we are exploring is the introduction of an electronic version of the bills that we are issuing today, an electronic krona. This is new territory for central banks. We don’t know yet the effects on other policy areas, how monetary policy would be affected. But this is the route we have taken.”

On What the Future Holds for Payment Systems

“There is only one direction to go and that is forward. We will have new technologies earlier in some countries, later in other countries, but the direction will be exactly the same all across the world.”