In a surprising turn of events, Sweden and Norway, two Nordic countries that have been at the forefront of the cashless society movement, are now reconsidering their plans amid growing concerns over Russian security threats and the potential exclusion of those unable to use digital payment systems.
The Rise of Digital Payments in the Nordics
Over the past decade, Sweden and Norway have rapidly embraced digital payment technologies, with mobile payment systems like Swish and Vipps becoming ubiquitous in both countries. The convenience and efficiency of these platforms, combined with high digital literacy rates and extensive internet coverage, had put the Nordic neighbors on a fast track to a cashless future.
In fact, the former deputy governor of Sweden’s central bank had boldly predicted in 2018 that Sweden would likely become entirely cashless by 2025. However, recent geopolitical developments and a heightened awareness of the vulnerabilities associated with fully digital payment systems have prompted a significant shift in perspective.
The Russian Threat and Cyber Security Concerns
Russia’s invasion of Ukraine in 2022 and the subsequent rise in cross-border hybrid warfare and cyber-attacks, widely attributed to pro-Russia groups, have forced Sweden and Norway to reevaluate their security strategies. This reassessment extends beyond military and intelligence matters, reaching into the very foundations of how citizens pay for goods and services.
If no one pays with cash and no one accepts cash, cash will no longer be a real emergency solution once the crisis is upon us.
– Emilie Enger Mehl, Norway’s Justice and Emergencies Minister
Swedish authorities are now advising citizens to keep at least a week’s supply of cash in various denominations, recognizing that prolonged power outages, system failures, or targeted digital attacks could render electronic payment systems useless. Similarly, Norway has introduced legislation requiring retailers to accept cash payments, ensuring that cash remains a viable alternative in times of crisis.
Ensuring Financial Inclusion in a Digital World
Beyond security concerns, the move towards a cashless society has also raised questions about financial inclusion. In Norway, an estimated 600,000 people lack access to digital payment services, effectively locking them out of an increasingly cashless economy. The government’s recent legislation aims to protect the rights of these individuals and ensure that no one is left behind in the digital transition.
Sweden, too, is grappling with the potential consequences of a fully digital payment system. As Max Brimberg, a researcher at Sweden’s central bank, notes:
Cash fills a very specific role in the payment system, both because it’s issued by the state but also because it’s the only form of payment that we can use if the systems for electricity or communications networks don’t work as they usually do.
– Max Brimberg, Researcher at Sweden’s Central Bank
Balancing Innovation and Resilience
As Sweden and Norway navigate this new landscape, they must strike a delicate balance between embracing the benefits of digital innovation and maintaining the resilience of their payment systems. While some experts argue that the example of Ukraine, where digital systems have proven vital to the country’s resilience, demonstrates the importance of moving forward rather than backward, others caution against an overreliance on technology in the face of modern threats.
Ultimately, the Nordic nations’ approach to cashless societies will likely evolve as they adapt to the changing security environment and work to ensure that their payment systems are both inclusive and resilient. As the world watches, Sweden and Norway’s experiences may serve as a valuable lesson for other countries seeking to navigate the complexities of a digital future.
In fact, the former deputy governor of Sweden’s central bank had boldly predicted in 2018 that Sweden would likely become entirely cashless by 2025. However, recent geopolitical developments and a heightened awareness of the vulnerabilities associated with fully digital payment systems have prompted a significant shift in perspective.
The Russian Threat and Cyber Security Concerns
Russia’s invasion of Ukraine in 2022 and the subsequent rise in cross-border hybrid warfare and cyber-attacks, widely attributed to pro-Russia groups, have forced Sweden and Norway to reevaluate their security strategies. This reassessment extends beyond military and intelligence matters, reaching into the very foundations of how citizens pay for goods and services.
If no one pays with cash and no one accepts cash, cash will no longer be a real emergency solution once the crisis is upon us.
– Emilie Enger Mehl, Norway’s Justice and Emergencies Minister
Swedish authorities are now advising citizens to keep at least a week’s supply of cash in various denominations, recognizing that prolonged power outages, system failures, or targeted digital attacks could render electronic payment systems useless. Similarly, Norway has introduced legislation requiring retailers to accept cash payments, ensuring that cash remains a viable alternative in times of crisis.
Ensuring Financial Inclusion in a Digital World
Beyond security concerns, the move towards a cashless society has also raised questions about financial inclusion. In Norway, an estimated 600,000 people lack access to digital payment services, effectively locking them out of an increasingly cashless economy. The government’s recent legislation aims to protect the rights of these individuals and ensure that no one is left behind in the digital transition.
Sweden, too, is grappling with the potential consequences of a fully digital payment system. As Max Brimberg, a researcher at Sweden’s central bank, notes:
Cash fills a very specific role in the payment system, both because it’s issued by the state but also because it’s the only form of payment that we can use if the systems for electricity or communications networks don’t work as they usually do.
– Max Brimberg, Researcher at Sweden’s Central Bank
Balancing Innovation and Resilience
As Sweden and Norway navigate this new landscape, they must strike a delicate balance between embracing the benefits of digital innovation and maintaining the resilience of their payment systems. While some experts argue that the example of Ukraine, where digital systems have proven vital to the country’s resilience, demonstrates the importance of moving forward rather than backward, others caution against an overreliance on technology in the face of modern threats.
Ultimately, the Nordic nations’ approach to cashless societies will likely evolve as they adapt to the changing security environment and work to ensure that their payment systems are both inclusive and resilient. As the world watches, Sweden and Norway’s experiences may serve as a valuable lesson for other countries seeking to navigate the complexities of a digital future.
