refusing to accept cash

The Riksbank has posted the following disclaimer on it's website:

Quote: Sweden's Central Bank website

The Riksbank is responsible for providing Sweden with banknotes and coins. Our tasks include issuing banknotes and coins, destroying worn-out banknotes and coins and redeeming invalid banknotes. The Riksbank does not govern how much cash is in circulation in society; this is instead determined by demand from the general public.

Sweden discontinued the 10,000kr banknote in 1991, when it was the most valuable banknote in Europe. The 1000kr banknote (worth 101.1 euros) peaked in circulation at 48.4 million banknotes in 2001 and is presently circulating at only 3.4 million for a population of 10 million. That's a ridiculously low level of circulation for a banknote. In contrast the 3.9 million of the US$500 banknote was produced before WWII although only 284,000 are believed to still exist.

Roughly 68 million 500kr banknotes (worth just over 50 Euros) are still in circulation and constitute over 2/3 of the cash in circulation.

I am still skeptical of this claim that there is no demand at all for any more banknotes. I am told that all Swedes have complete faith in banks, and virtually nobody wants to keep the equivalent of a thousand dollars or more under their mattress for emergencies like a power outage or a solar flare.

Quote: Pacomartin

I am still skeptical of this claim that there is no demand at all for any more banknotes. I am told that all Swedes have complete faith in banks, and virtually nobody wants to keep the equivalent of a thousand dollars or more under their mattress for emergencies like a power outage or a solar flare.

Very easy to settle this question. Just google Swedish advertisers for such products as emergency rations, reflective clothing, standby power generators, malware protectors, strong padlocks, bicycle locks, automobile burglar alarms, etc. If your research indicates that people in Sweden are aware of various technology related dangers then you would be well advised to conclude that they are aware of widespread ATM failures, massive power grid failures, embarrassing malware problems at a bank's central computers and therefore have normal fears that others have.

Quote: Fleastiff

... they are aware of widespread ATM failures, massive power grid failures, embarrassing malware problems at a bank's central computers and therefore have normal fears that others have.

The 1000kr banknote (worth 101 euros) is interesting case. Since circulation is roughly one banknote for every three people, the logical question is why produce the note at all? That circulation rate is about 8 times lower than that of the US $2 banknote, which many people question why the US government bothers to print them at all.

But Sweden does not divulge the production quantities of their banknotes. Either the government only ordered a few million notes, which weakens the argument that circulation figures are only controlled by demand, or the government has ordered tens of millions of notes. In the latter case, the Swedish government must be prepared for some sort of cataclysm.

Another possibility is that the EMU is circulating roughly 9.5 billion €50 banknotes. Presumably there are enough of them in circulation in Sweden that some transactions could keep going for a day or two.

What about withdrawal from circulation? I can't imagine withdrawing all those 50s even if many of them are illicit proceeds but withdrawing all those 100s would be much easier and then afterwards issuing new ones or perhaps just high serial numbered ones?

I do not see any evidence of 'The Swedish character' being responsible for this situation.

Quote: Fleastiff

What about withdrawal from circulation? I can't imagine withdrawing all those 50s even if many of them are illicit proceeds but withdrawing all those 100s would be much easier and then afterwards issuing new ones or perhaps just high serial numbered ones?

I do not see any evidence of 'The Swedish character' being responsible for this situation.

Removing high value denomination cash from circulation can be tricky.

See the problem is that in the USA and Canada, banknotes remain valid forever. So the "little headed" $100 banknotes of the series before the 1996 series are still legal currency. It's just that most of them have since been turned in and destroyed. But the USA prints more and more banknotes with each series.

When Canada stopped producing the pink CAD$1000 banknote in 2000 the notes are slowly turned in to commercial banks where they are sent to central bank for destruction. Canada did not limit the production of the new polymer banknotes other than to delete the CAD$1000 denomination.

Sweden issued basically six versions of their 1000kr banknote and have since declared five of those versions to be "invalid". Since 2006 they simply circulate fewer and fewer numbers of notes.

Swedish series of 1000kr banknote
#1 1894-1950 invalid on 31 December 1987
#2 1952-1973 invalid on 31 December 1987
#3 1976-1988 invalid on 31 December 1998.
#4 1989-1991 invalid on 31 December 2013
#5.introduced on 15 March 2006, invalid on 30 June 2016
#6 introduced 1 October 2015, but circulation of sixth series never got to more than 3.5 million notes
-> Circulation of 1000kr peaked in Sweden in 2001. Production quantities of #5 series are state secret but they probably were no higher than 10 million notes. Production quantities of #6 series are also a state secret, but circulation is still below 3.4 million notes.

Norway is following a plan of simply not producing any new 1000kr banknotes for more than a decade. Large value banknotes don't circulate very quickly, as they are more likely to sit in home safes. But eventually they make their way to banks where they can be destroyed. Over the last 9 years the supply has been reduced by 38.4%. But Norway is going to eventually declare the old note invalid (probably in five years) and is expected to follow Sweden't lead of producing a new note in very small quantities.


David Wolman recommends that the USA get rid of coins immediately. It is the strategy being pursued by South Korea.

Prices wouldn't have to change if we eliminated coins and substituted a petty cash card that could be waved at sensors for the odd cents. Replenishable or one-use. Purchase in $20 or $50 denoms. There'd be at least a 5 yr transition period, but maybe the mint could subsidize the sensors and save money in the long run over minting coins.

Otoh, nobody collects cards, but many thousands, if not millions, collect coins, which don't get redeemed against the treasury. No idea whether it's a significant source of secondary revenue, but after they finished the 50 state quarter series, they went to great length to come up with others, with territories, national parks, and who knows what else. So I expect it is probably profitable.

Quote: beachbumbabs

Otoh, nobody collects cards, but many thousands, if not millions, collect coins, which don't get redeemed against the treasury.

Coins are charged against the US government at face value. It doesn't matter if they end up in landfills, coin collections, or are actively used. Believe it or not, it was one of the reasons that the US government didn't follow Canada's lead and discontinue the $1 banknote when they issued the coin.

The $2 bill is profitable for the reason you mentioned. There were 134,400,000 two dollar bills produced from the 2009 series worth $208.8 million. That is roughly one $2 bill per household in the USA. Technically they are registered as a liability, but they never circulate, never wear out, and no one turns them in to commercial banks.

So while governments around the world encourage people to purchase stamps to put in collections instead of to use for postage, the $2 bll is worth much more.

Series $2 banknotes
???,?00,000 2013 series
134,400,000 2009 series
230,400,000 2003A series
121,600,000 2003 series
153,600,000 1995 series
575,360,000 1976 series

From a purely utilitarian viewpoint the government should never have printed any notes after the 1976 series, but they knew that suckers would squirrel the new notes into collections.

However, eliminating the penny and the nickel would encourage the use of petty cash cards since some people would get tired of being short changed to the nearest dime. The use of petty cash cards would in turn decrease the need for dimes and quarters and the $1, $5 and $10 banknote.

Quote: Pacomartin

However, eliminating the penny and the nickel would encourage the use of petty cash cards since some people would get tired of being short changed to the nearest dime. The use of petty cash cards would in turn decrease the need for dimes and quarters and the $1, $5 and $10 banknote.

With no penny in Canada nobody gets short changed to the nearest nickel. That doesn't need to happen Paco. In Canada a purchase of x.01 or x.02 is rounded down to x. A purchase of x.03 or x.o4 is rounded up to x+5. In theory it will all even out but you do hear stories of merchants pricing things so they will get the round up. Taxes have to be taken into account for final price to be a round up and I have not noticed the round being more prevalent personally. If you are paying without cash you pay to the penny.

Why short changed?

In Canada, .01, 2, 6, 7 round down to the nearest nickel, .03, 4, 8, and 9 round up.

If you were eliminating nickels, .01-.04 would round down, .06-.09 would round up, and .05 could round to the nearest even dime, so .05, .25 would round down to .00 and .20 etc, and .15, .35 would round up to .20 and .40, etc.

Quote: Dalex64

In Canada, .01, 2, 6, 7 round down to the nearest nickel, .03, 4, 8, and 9 round up.

I didn't know they round down. I just assumed everything rounded up.

The real problem is that while the big chains will accept credit cards for any size purchases, small merchants don't want to be bothered for less than $10 or $20 as the cost of using commercial bank cards exceeds the profit margin of the items. In countries where mass transit is prevalent, merchants have adopted the mass transit card for petty purchases. In the USA outside of NYC and San Francisco the majority of people do not use mass transit cards.

The EMU is circulating about 335 coins per capita as of the end of 2016. Stores in some countries do not accept the bronze coins; penny, two penny , and 5 cents which constitute about 2/3 of the coins in circulation.

Per capita coins in circulation
17 EUR 2
21 EUR 1
17 EUR 0.50
32 EUR 0.20
21 EUR 0.10
--------
57 EUR 0.05
74 EUR 0.02
96 EUR 0.01
335 total Euro coins per capita in circulation as end of 2016

But if the European Monetary Union produced 96 pennies per capita over a 15 year period, the US Mint has produced roughly 1000 pennies per capita since the zinc penny was adopted in 1982 (through 2016). The actual number is 320.3 billion.

While Japan and Eurozone still have the penny, they don't produce them in such massive quantities like the USA.

35 JPY 500
84 JPY 100
35 JPY 50
153 JPY 10
85 JPY 5
300 JPY 1
692 TOTAL Japanese coins per capita in circulation as end of 2016

47 KRW 500
189 KRW 100
41 KRW 50
166 KRW 10
443 total Korean coins per capita in circulation as end of 2016 (to become invalid by 2020)

8 GBP 2
27 GBP 1
17 GBP 0.50
47 GBP 0.20
13 GBP 0.10
63 GBP 0.05
101 GBP 0.02
172 GBP 0.01
448 total British coins per capita in circulation as end of 2016

34 AUD 2
38 AUD 1
41 AUD 0.50
78 AUD 0.20
48 AUD 0.10
181 AUD 0.05
421 total Australian coins per capita in circulation as end of 2016

It's a little surprising Australia has so many coins since they don't have anything smaller than a nickel.

Canada and USA don't keep track as their money (including coins) can't be called back in and are not considered liabilities. But as I said earlier, the USA has produced 1/3 trillion pennies since 1982 when Bronze was replaced with zinc.