Imagine a place where all economic transactions are conducted with either cards or electronic transfers. This particular form of economy has materialized almost completely in some northern European countries.
Paradoxically, it is in those same countries where a heated debate has recently emerged about the dangers of a society without notes or physical coins. There is a very important part of society in these countries that has decided to stand up and rebel against this society without cash, and from the outside many other countries have their eyes on them.
The cradle of the adoption of the society without cash
The maximum exponent of the trend without cash was reflected in the recent news that the last Scandinavian Mint had closed. Indeed, Denmark followed in the footsteps of its Scandinavian neighbors, Sweden and Norway, and outsourced the production of coins to its neighboring Nordic country Finland.
This idea of a cashless society is gaining momentum where more and more restaurants, even here in the US, have stopped taking cash.
A Cashless Society
But as the future is always unpredictable, in only a few months, there has been dramatic change. The Nordic “anti-cashless” resistance has sprung up and gained momentum because of the disadvantages of going cashless. For an increasingly important sector of the population, these disadvantages pose an increasingly unattainable national risk.
In Sweden, many citizens have now come to think that getting rid of cash puts them at risk of suffering an attack on the country’s economic system. The attention calls focus on highlighting the vulnerability of a purely digital system to fraud or external attacks.
The truth is that there have always been critical voices in Sweden that stood up against the massive digitalization of their payment systems, but until now, they hardly found an echo in Swedish society. Recent events worldwide have sounded alarms throughout the country.
The Nordic countries have always looked askance at Russia, a superpower with which they share closeness and borders, and that has often shown territorial claims to these countries. In fact, we can not forget that, in the course of World War II, in 1939 the then Soviet Union invaded Finland, a warlike aggression that is still very much alive in the memory of both Finns and their Nordic neighbors.
And no wonder, since, far from those turbulent and lethal years of the last century, Russia seems to want to give reasons to resuscitate the worst fears of our neighbors in northern Europe. In fact, Russia made specific military maneuvers to test the military invasion of Finland, Sweden, Norway and Denmark. These well-founded fears have also been kept in mind when it comes to the digital world, and the Swedes fear cyber attacks, especially by Russia, and in particular against its financial and payment system that is so digitally vulnerable.
The reality in Sweden is that they have been lucky enough to have a run of mostly good politicians for the past 100 years. This has had as collateral damage, the fact that today’s Swedes can afford to be more conformist, less inclined to mobilize, and rely more so on the good work of their politicians.
As we mentioned before, the heated debate has reached the highest financial institutions in the country. The governor of the Riksbank (the Swedish central bank), Stefan Ingves, called for drafting new legislation to ensure public control of the country’s payment system, arguing that being able to make and receive payments is a collective service.
There are many voices that, given the almost exclusively private control of the country’s payment system, now see a very vulnerable point in the fact that it is not a publicly planned system. It is argued that public management would more rigorously assure contingency plans against external aggressions, ensuring the safety and interest of all Swedish citizens.
They argue that private managers are not going to worry about clearly uncertain international political events until the worst scenario is realized, by which time it will be too late. And they are not incentivized to change the payment system to mitigate these because of the high implementation costs today, which would reduce profitability, in exchange for a potential benefit that may never materialize. And in any case, it would have a national defense aspect rather than merely capitalist profitability.
We will not enter into the eternal debate of whether to go for a model of public services and high taxes, or private services and low taxes. You already know that our opinion is that this debate is sterile, and what really makes a difference is the quality of the managers, whether public or private. But the truth is that now this issue of cashless society for the Swedes has become a matter of national security.
We will not tire of repeating it: the technical society also has its great dangers
The risks that apply to a cashless society, to some extent, are also applicable to the new kids on the block – cryptocurrencies. Its purely technological base makes the Swedes feel dread. Do not forget that, after all, cryptocurrencies are software, and as such are susceptible to bugs, security holes, erroneous architecture designs, and computer attacks by the dark side.
Personally, I’m very fond of contingency plans, and of avoiding risks rather than solving problems. And I am more motivated when it comes to the economic-financial system of a country, because of its strong implications for national security and stability. To eliminate money on paper is a huge gamble.
If the play goes well, there will be benefits, but if it goes wrong, not only will there be monetary losses, but there may be a socio-economic disaster of unfathomable proportions. Think for a moment what would happen to their lives if someone pulled down or hijacked the means of payment in their country if they already had 100% electronic money. It would be an economic agony with the very probable outcome of having no other option but to bend to the enemy. And no, it is not something neither impossible nor improbable, but quite the opposite. Plan B was never so attractive or so necessary.