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Sweden has recently begun moving away from paper money, favoring instead money of the electronic kind. Not to say the country has completely eliminated the need for physical money, but bank notes and coins make up a meager 3 percent of the Swedish economy, contrasting with a 7 percent average for the rest of Europe and 7 percent for the United States.
In major cities, public modes of transport have stopped taking cold, hard cash. Tickets are instead bought in advance or with a text message from a cell phone. These businesses are not alone. Many other businesses now accept only cards, and a few banks no longer handle physical money in any way, preferring to profit from electronic transactions.
Even churches have made the jump, with many now accepting cards when worshipers make donations. Many have expressed concern at the technological jump. Those that prefer coins and bills are worried about the complexities that appear with such an economy.
The young and others may have a good grasp on technology, but for the elderly in rural parts, these new methods present all sorts of problems. Many do not even have credit cards, and most of those that do, do not understand how to withdraw money or use their card in many transactions.
This move to digital money, however, has undeniable benefits. There is now much less room for shadow economic activities, like concealing profits when tax season comes in Sweden, especially when compared with the rest of Europe. In Italy, Prime Minister Mario Monti has moved towards limiting cash transactions to payments of up to one thousand pounds.
Another beneficial effect is a reduced number of robberies in cash-holding organizations. The number of bank robberies went from 110 in 2008 to 16 in 2011, the lowest since data began to be recorded 30 years ago. Robberies of security transports have also lessened.
Not that this switch has not caused any problems. Cyber-crime is on the rise, with the number of reported crimes up from 3,304 in 2000, to the astronomical 20,000 in 2011.
Oscar Swartz, the creator of Sweden’s first Internet provider, Banhof, thinks that a digital economy also complicates matters of privacy, due to electronic trails resulting from transactions. “One should be able to send money and donate money to different organizations without being traced every time,” he says.
It is unlikely, however, that physical money will be completely phased out anytime soon. A much more likely possibility is that it will slowly play less of a role in the economy, though not disappearing completely anytime soon.
Sweden was ranked number one in the Global Information Technology Report, first shown at the World Economic Forum in January, for the second time in a row. The Economist Intelligence Unit listed Sweden first in 2010, in its most recent digital economy rankings. These rankings track how much countries have integrated information and communication technologies within their economies.
In 1661 Sweden was the first European country to introduce bank notes to its people, a move that very much helped all countries move forward. Now, as the country phases them out, could they be on the right track once more?