People in Sweden are hiding cash in their microwaves
business.financialpost.com
business.financialpost.com
This kind of brings me back to Fox News reporting cataclysmic imagery about cars being burnt in my city (Gothenburg) some time back. External "perspectives" are comedic gold, indeed.
It's strange, whenever you read about something you know a lot about in a newspaper they will usually get so much wrong that the article actually makes you less knowledgeable about the subject.
Makes me question reading news at all.
Not using cash isn't inherently a problem. The issue is that the alternatives are all tracked. If systems existed like sci-fi "credsticks" with zero-knowledge proofs (so as to not connect transactions), that'd be fine while mitigating most of the problems of cash (dealing with cash; securely transporting it).
1: https://www.credit-suisse.com/us/en/news-and-expertise/econo...
As mentioned public transportation is one area where cash is commonly not accepted any more. Banks obviously encourage card payments over cash and have also been reducing the number of their own offices that handle cash. On the other hand most grocery stores in Sweden allows you to withdraw cash when you shop and charge your card. If you need cash that's the most convenient way to get it.
Entirely cashless stores are quite rare. Maybe it is a bit more common in some big city locations, where the loss of the very few customers who cannot pay by card doesn't matter - simply because the vast majority already pays with cards.
On a personal level I prefer card payments and it can easily pass weeks between the very rare cases where I have to use cash.
That said, I would really not like a cashless society if that means I cannot have any mean of traceless transactions. I want to be able to hand over money to people I don't know or necessarily trust beyond a superficial level, without having to account for it later.
As for cash in the microwave oven... Well, duh, where else would you keep them? :)
For local travel, commutes, etc, you normally get a pre-charged travel card from the local public transit provider. The route and cost of each individual trip is then a transaction limited to the transit provider's internal charging system. You can also buy a single ticket directly with your bank card, but the bank will still only see when the charge occurred, how much was charged, and possibly which charging station, not where you travelled.
Obviously the travel provider's internal charging system will have detailed information about how their travel cards are used to pay for trips. Still, the cards are normally not personal, so the provider cannot know it's the person charging the card that also is the person travelling.
The only place I would pay with cash though is in a bar, all other places I prefer to pay by card.
I do agree with you there could be problems in the future where digital payments start becoming the only option (which I'm hoping for) and their certainly is a market for future products. I bet they will be looked at in the same way as VPN services are looked at now though.
Also, many cities' communal services like busses and trains no longer deal in cash.
[1]: http://www.yaki-da.se (In the bottom right says "Yaki-Da är en helt kontantfri restaurang och nattklubb.")
http://www.theguardian.com/world/2015/feb/12/paris-lawsuit-f...
For example: on Tredje Långgatan (a popular street) in Gothenburg, most (all?) restaurants have a policy to not accept cash at all. I've seen this at many other places as well, and certainly not just in Gothenburg.
Another example is this summer when I went to see a concert and wanted to buy ear plugs, since I'd forgotten to do it earlier. The seller I spoke with outside the stadium didn't accept cash, but instead used something called Swish. It's a way to send money with your phone – kind of like Venmo I guess.
The move to a cash-less society has been ongoing for some time, and communal services such as busses and trains in many cities gave up on cash several years ago.
For the most part I think a move to a cash-less (as in physical moneys) is a good move. The problems I have personally seen and been affected by, although not enough to care for paper moneys, are:
- Smaller shops not accepting card purchases below a certain amount, or passing on the processing fee on to the consumer (probably against their contracts) - Banks being very reluctant to handle cash from business; either making it very difficult by imposing strange limits (only a certain amount accepted per day/week,) or imposing expensive handling fees, or both - Being a tourist in a city where you can't easily pay bus fare makes it difficult to get around; for the record: Gothenburg is the only city in Sweden I've seen that gets this right by having card machines on trams, while my home town of Stockholm is a lesson in absurdity when trying to pay the fare
I think the positives currently outweigh the negatives, but as more and more services go cash-less, problems start to show. For instance there have been several high-profile outages where it's been impossible for people to make payments, because the systems are down for an extend period of time. Cash may be expensive to deal with, but you can't (currently) beat it when your internet connection goes down.
Currently, all significant alternatives to using cash in Sweden are technically more or less the same. Swish may have a different user experience, but the payments are still processed by banks and so face the same problems of stability. In fact, the product is proprietary and owned by a company called Getswish AB – a private company owned by major Swedish banks.
Aside from uptime, cash has the benefit of being a point-to-point method of payment, not involving a third party. Swish, cards, and other forms of payments that play any significant role in Swedish society all involve a third party (usually banks.) There are obvious privacy concerns with this, but moreover it also means because the third party authorizes the transaction you can be shut down at any moment and for any reason. Sure, you might have legal options, but that's of little help when you have to buy food and all your money is locked away – possibly due to glitches.
Also, what happens when the banks fail more permanently? Sucks to lose your money, sure, but it sucks even more for the economy at large when there's no way to move money around. It further cements the "need" for big banks in society, since they effectively own the transactions when there's no way to make them without the banks.
I am concerned, but mostly for reasons other than the ones in that article, which seems to treat cash as some magical asset that isn't really affected by interest rates.
> Björn Eriksson, former head of Sweden’s national police and now head of Säkerhetsbranschen, a lobbying group for the security industry, told The Local, “I’ve heard of people keeping cash in their microwaves because banks won’t accept it.”
If it is implemented, microwaves become logical choice to store cash in because they're practical Faraday cages.
From a practical standpoint, should people start "hiding" their notes in their microwaves, that would be the first place to look if you're a bad guy.
The obvious benefit of the microwave is that it's essentially a Faraday cage so you don't need a special tinfoil hat for your money, only for yourself.
It's one thing to lose it to investments. It's another thing to expect the money to sit without gaining appreciable interest, and effectively losing value because of inflation.
If someone puts 1,000 units of currency into a bank, why should they ever not be able to retrieve that 1,000 units at any reasonable point in the future?
In the USA, due to the anemic social care programs for people in dire straits (long-term unemployed, sick, young, old), it is necessary for people to individually save up money to guarantee safety in emergencies. To that end, saving in banks is rewarded with interest rates.
In more social countries though such emergency savings are spread across the entire population in big pots. People saving their money in bank accounts are effectively keeping it out of those pots, and from society at large, which society punishes by making such individual savings volatile.
Deflation means that 1 unit of currency will be worth more tomorrow than it is today, hence it is explicitly rewarding keeping money instead of investing it.
So who is paying them now? And once they get passed on, the scenario will look like what i described, no?
I also do not understand why you bring up deflation.
Is it a positive outcome if property prices inflate so much due to this, that it pushes Sweden's households into such extreme levels of debt that the economy barely grows and debt service levels become untenable? Sweden is at that point right now. Eg:
http://www.bloomberg.com/news/articles/2015-06-29/swedish-po...
http://www.cnbc.com/2014/11/09/sweden-grapples-with-massive-...
http://blogs.wsj.com/economics/2015/06/03/riksbank-sees-incr...
Why should a bank offer service for free? Yes, they might make money doing stuff with your money, but that shouldn't be a mandatory requirement for a bank.
If given a choice, I'd rather pay money for stronger guarantees on the safe keeping of my money, and guarantees that my money isn't being used for anything but safe keeping. I could put cash in a vault, I suppose, but I don't want cash. I'm perfectly fine with my money being all digital, I just want it kept safe and away from criminals regardless of whether they wear masks or three piece suits.
It should be noted that the markets have been doing very well throughout this period, so it's not a matter of "stagflation", at least not yet.
As long as the expected return for investing my money is something way higher than zero, I expect to be able to lend them my money without paying for it. And as long as a bank can invest their customers money at good returns, they will want to attract money from customers.
Obviously, to stop people from running the bank. You can say it's a bad idea, but it's not like the reasoning is mysterious.
They could choose to invest into any number of assets instead of holding cash. Open a brokerage account and buy a high quality stock that produces a dividend.
Euribor is the basic interest rate that European banks use to determine interest rates on savings and mortgages. A negative value basically means that you have to pay the bank if you want them to store your savings (which they are free to invest or lend). Banks will typically give you some extra percentage points over Euribor though, so as a customer you currently see somewhere around positive zero of interest on your bank savings in my country.
The new central printed money is flowing to the stock exchange and creating an epic housing bubble in Sweden.
The banks here used internal risk weights so created a loan on a million just cost them around 2000 that was fractions of fractions of cash needed to create housing loans.
Personally I think its housing market loan Ponzi scheme where the last ones in to loan when the prices no longer rise are set to loose.