Cashless Sweden And Coin Collecting

Trusting your bank is a little different than trusting your government. Banks in the USA are not guaranteed against failure, and even if you rely on the Federal Deposit Insurance Corporation (FDIC)it may take some time to for your money to come in.

One measure of "store of value" is the percent of "narrow money" kept in currency. Values for 2015 except as noted.
3.17% Sweden
4.38% United Kingdom (for 2014)
6.71% South Africa
9.78% Canada
12.23% Korea
13.58% Switzerland
15.96% Japan
16.77% Euro area
17.35% Saudi Arabia
23.53% Australia
23.95% Singapore
29.67% Hong Kong SAR
33.65% Turkey
36.97% Mexico
45.28% United States
51.47% Russia
67.43% Brazil
67.68% India

This metric highlights how the USA is even very different from the Euro area and more like a third world nation.

As usual the foreign holdings of US dollars do skew the results.

Well the big question is will Sweden's experiment be copied by other countries? Consider that Sweden is essentially at about the same value of currency circulating as they had in 1988.

In 19888 USA had $215 billion in banknotes and coins in circulation. Today, the USA has $218 billion in small banknotes ($1-$20) in circulation. Personally, I would like to see just some inkling of restraint, even if it was to limit the circulation of the new color c-note to $1 trillion.

The Euro Zone passed €1 trillion sum of banknotes and coins in November of 2017, and while the €500 banknote has decreased by 10% in 8 months since the announcement that it was being phased out, the overall value of banknotes has increased. So they are simply being replaced with smaller denominations.

The Japanese Yen banknotes and coin in circulation are worth 103 trillion yen worth $1 trillion. Of course, the government is relenting to pressure and increasing production of new banknotes. The value of 10,000JPY~£76. Whil the UK is circulating four £50 notes per capita, Japan is circulating over seventy 10,000JPY notes per capita.

Interesting analysis.
But I think your numbers for the 20kr and the 100kr are too low; the number for the 50kr also seems to be too low. I think Riksbank ordered 20-25% more notes than are in circulation. Production of banknotes takes time and it's good to have some reserves (even in Sweden).
The UK ordered 440 Million new Fiver, 330 Million (old) were in circulation; Australia ordered 170 Million new $5 notes, 161 Million were in circulation.
So I guess it's more likely 60-65 Million new 20kr and 100 kr notes, and 25-30 Million new 50kr.
The 200kr is hard to guess because it's a new denomination. But I agree with your estimates for the 200kr (and the 500kr) notes.

The figures for the 1000kr? Well, that's a really tough one. My guess: 3-5 Million.

I wonder what the cost of cash is in Sweden? If Sweden has 3% of the population of USA than 3% of $200 billion is 6 billion USD or about 50 billion SEK. But with much less cash to deal with let's assume the rate is much lower, so perhaps half as much or 25 billion SEK in a year.

As I understand it Sweden is still enjoying house price growth of 25% year over year. In any bubble a small number of people will make out like bandits. Some people are going to sell property at record highs when the inevitable market correction occurs. What will happen to those people? Will they they invest in foreign currency, will they buy antiques, or will they simply leave money in the bank.

Sep 30, 2016 (final numbers before new 100 and 500 kr banknotes issued)

Millions of notes
Valid : Denom
48.3 : 20 kr new
18.9 : 50 kr new
52.1 : 100 kr old
26.0 : 200 kr new
77.6 : 500 kr old
2.8 : 1,000 kr new
225.7 : TOTAL

There were 114.4 million 500 SEK banknotes in circulation at the end of 2014 and 99.6 million at end of 2015. So now 9 months later they are down to 77.6 million. Maybe it is not so preposterous that they only produced 50 million of the new ones.

That may be true, but that doesn't mean there is nothing sensible in the conclusion. The reality is that the USA BEP produced 7000 metric tons of banknotes and probably destroyed a similar amount. About 35% of that total was the $1 banknote and another 27% was the $20.

Four decades ago, the government tried to reduce costs by making a $1 coin, but silly pandering to a whiny public meant that US is the only developed nation in the world to not have a coin on this value level.

In the 29.3 years since 20 June 1987 and the Canadians began circulating the "loonie" or Canadian dollar coin which was patterned to be the same size (except for thickness) as the USA Susan B. Anthony dollar coin the US Bureau of Engraving and Printing has produced 100,000 metric tons of dollar bills. All those bills have to be transported in secure trucks, distributed and collected for review and destruction at a terrible environmental cost relative to their usefulness to society.


But the time for a widespread $1 coin has come and gone.The government should have an anonymous electronic currency with very limited spending ability just to avoid the cost of small change.

Every central bank in the world states that they produce enough cash to meet demand. Politically it is a very safe statement to make.

But then the Riksbank publish articles that make statements like: Between 2000 and 2004, this unexplained cash demand has remained relatively constant at between 63 and 67 percent of the total currency in circulation
http://www.riksbank.se/Upload/Dokum...07/wp204.pdf

The conclusion of this report is that 63% and 67% of the cash in circulation in Sweden goes into the "shadow economy".

Since 9 July 2014 Sweden has been charging commercial banks when they deposit funds in their accounts at the Riksbank overnight. From 18 Dec 2013 to 8 July 2014 they held cash for free, and previous to that they used to pay interest to the commercial banks. This change has made handling cash for banks to be even more expensive than normal. Cash is usually a money losing operation for banks because it is so costly to count and store and defend against bank robbers.

So the deposit rate is set by the Swedish central bank to meet certain monetary policy goals (like controlling interest rates), but then the banks in Sweden are motivated to reduce their reliance on cash. You can see how little they keep in the banks relative to other countries. Keep in mind that it is not just a smaller percentage, but the country has also greatly reduced the absolute value of cash circulating in the country.

Percent of Banknotes and coins held in banks
Year	Sweden	Aust.	USA	Japan
2011	8.1%	14.0%	6.7%	10.2%
2012	7.8%	13.8%	6.8%	9.4%
2013	3.9%	13.3%	6.6%	10.5%
2014	4.3%	12.0%	6.6%	10.3%
2015	2.6%	10.9%	5.9%	9.7%

The banks are even more motivated to develop stuff like the very popular phone app, SWISH, which makes transfers of money from private bank account to private bank account very easy. Now they are developing "contactless cards" that will permit Swedes to make purchase of up to 200kr without entering in a Personal Identification Number.

It makes it much easier for an individual to reduce dependence on cash.

So it is not "supply and demand" like people prefer oatmeal cookies instead of chocolate chip cookies, so the store needs to stock more oatmeal cookies. It is more of a feedback loop where government policies influence the bank procedures which influences behavior of citizens which influences the amount of cash in everyday usage.

So at present exchange rates
100AUD= 655SEK

Change in value of banknotes and coin from 2012-2015 in circulation
-24.3%	SEK		21.3%	AUD
-80.4%	SEK 1000	32.0%	AUD 100
-12.1%	SEK 500		17.0%	AUD 50
-14.1%	SEK 100		-0.7%	AUD 20
-10.8%	SEK 50		9.1%	AUD 10
+06.2%	SEK 20		9.7%	AUD 5

Sweden posted on their government tourist website that the Riksbank was predicting that cash would be reduced by 20%-50% in the eight years from 2012-2020. Well they went down 24% in only three years, and the reduction has been over 10% in the first 9 months of 2016.

So the questions that remain is how far will they go before they stop? Will there be a backlash from conservative pro-cash groups in Sweden? What if there is a real estate crash in Stockholm? Both the real estate and the currency in Sweden shows up on lists as overvalued.

Almost everything in economics has an upside and a downside. I think that calling economics the "dismal science" is appropriate.

The loss of most cash bring a huge amount of efficiency to business and to people's lives and it allows much more control of illegal activities. But what happens when the business cycle changes?

Exactly how many 1000kr banknotes are stored away in the e central bank in case of emergency. But once they are out of the vaults of the central bank, they will probably stay in circulation for decades.

Is any country going to copy Sweden's lead. Norway seems the most likely. I thought that the British might diminish the number of £50 banknotes, but instead they increased the rate of circulation by a record amount last year.

Banknote numbers: The letters indicate the year in which the banknote was printed. A = 2013, B = 2014 etc. The two first digits indicate where on the printing sheet the banknote was printed. The final seven digits are a serial number.

I thought there were six digits in the serial number, not seven. That means there are 500 million possibilities (not 50 million). I humbly apologize for that mistake (tail between legs).
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http://www.atmmarketplace.com/blogs...ure-of-cash/
Too big to die?: Debating the future of cash
Sept. 28, 2016 | by Mike Lee

Debates like the one are pointless and distracting. Of course, cash can't be abolished.

The real question that Sweden is asking is can cash be limited in any way without damaging the economy?

The Euro area had a population of 306 million in the year 2000, and they had €380 billion equivalent in national banknotes which dropped to €270 billion by the end of 2001 as they prepared for the changeover. Although 15 million people were added as seven small nations joined the Euro zone, banknotes in circulation exceeded €500 billion by March of 2005, €1093 billion by Aug 2016.

Sweden is willing to admit that cash is a vital part of the economy, but they might be able to function with cash at close to 1% of GDP instead of 10%.