Sweden's New Banknotes

I know that the largest Russian banknote (5000 rubles) is worth only slightly less than £50 (and not much less than $100), and was actually worth a bit more than either before the exchange rates went sharply up at the end of 2014.
To the best of my knowledge, however, nobody is seriously proposing to eliminate it (though it helps that the next largest denomination is not about half as much, as in the UK and US, but only a fifth of the value). Indeed, there are proposals to introduce a higher valued banknote (i.e. 10000 rubles).

IMHO it's actually more inconvenient when the highest valued note is worth little; we pretty much had to travel with wads of cash when in Israel (NIS 200 ~= $25), or, if to a lesser extent (due to lower prices), in Belarus (200000 Belarusian rubles ~= $15).

@Paco Martin: I am still reading
By the way, if you are interested I could email you a recent newspaper article about cash in Sweden by a german journalist who's living there. Just drop me a note. Unfortunately, I can't post the article here (and besides it's in German. So I had to translate it).

Of course, the Harvard prof is wrong.
Eliminating the banknotes mentioned WILL NOT reduce crime/illicit activities. Even the head of the Bundesbank acknowledged that fact just recently.
Academia, certain ecomomists and certain central bankers just want to make it easier to introduce negative interest (orr make them even more negative).
Governments also like the idea because it makes it easier to control their people. No cash means no freedom and loss of privacy.



Either people will find another way to protect their money/wealth and/or civil unrest will happen.

---the inclusion of the £50 to the list of ''dangerous banknotes'' is too much and just utterly ridiculous

---I agree, the Swedes trust their banking system too much. And their ''aversion'' to cash will probably backfire on them in one way or another eventually.

---I can't send you my email address via the CCF's contact information because when I try via your Profile I get this: ''This Member does not wish to receive e-mail.'' You might have to adjust your settings (can change it later again).
I'm sorry, but I just can't post the newspaper article here.

Let me layout a hypothetical scenario for X2an.

The Riksbank is introducing new 200-kr banknotes at the rate of about 1.5 million a month, so right now there are not a lot of them in circulation. In contrast the new 20-kr banknotes are being introduced at 7 million a month. It makes sense since the bank has only 9 months before the old 20-kr banknotes are declared invalid, and there must be enough new ones so as not to impact routine business,

But after June 2016 when the old 20-kr are invalid, the Riksbank increases the rate of new 200-kr banknotes being added to circulation. By this fall there enough 200-kr notes that banks only fill the ATMs so that they stop dispensing the old 500-kr banknotes. After all new 500-kr ones will be issued in January 2017. So after June 2016 with many of the ATMs converted, new 200-kr banknotes are added at the rate of 5 million a month.

But in January 2017, only a handful of the ATM's dispense the new 500-kr banknote. Initially they say that the new 500-kr banknotes are being introduced at 2 million a month. If people object that they are not being produced fast enough, the Riksbank says they have to introduce the new 100-kr banknote at 10-12 million a month because they only have 6 months to replace the old supply before they become invalid.

But by June 2017 when the 100-kr and 500-kr banknotes become invalid, the country has learned to live with a small fraction of the 500-kr banknotes that used to be in circulation. At peak there were 120 million 500-kr banknotes, and currently there are 92 million 500-kr banknotes in circulation. So by "small fraction" I mean something like 30 million, but I think there is a possibility of a token number of 500-kr banknotes like 10 million

Cash in banks can be measured by hours of GDP for a country, and Cash outside of bank by days of GDP for the same country. That makes it easy to compare different countries and change over time. Comparing Canada, U.K. and Sweden for the five year period from 2010 to 2014 (with Euro zone shown for contrast) we get the following statistics:

Hours of GDP (cash in bank)
2010- 2011- 2012- 2013- 2014
31.3- 31.7- 33.4- 30.6- 27.8 Canada
28.3- 30.9- 28.9- 23.2- 32.9 United Kingdom
21.7- 19.2- 17.6- 7.8- 8.0 Sweden
50.6- 50.2- 54.6- 53.9- 54.6 Euro-Zone

Days of GDP (cash circulating outside of banks)
2010- 2011- 2012- 2013- 2014
12.3- 12.1- 12.3- 12.5- 12.7 Canada
12.8- 12.9- 12.2- 11.8- 13.2 United Kingdom
9.9- 9.1- 8.8- 7.9- 7.4 Sweden
47.5- 50.7- 47.5- 50.5- 52.9 Euro-Zone


So in 2010 Sweden, Canada and UK's cash in circulation was in the same ballpark. Banks carried roughly a day of GDP in cash, and 10-13 days of GDP were in cash outside of banks.

Over the 5 year period, UK has had fluctuations, but overall they have made a small increase in their cash supply primarily by introducing a new £50 banknote and increasing circulation by over 25%. Canada has been nearly constant increasing cash at about the same rate as GDP.


Sweden has radically reduced the supply of cash in banks to only 8 hours, and the supply of cash outside of banks by about 25%. Primarily the cash supply was reduced by circulating the new 1000-kr banknotes with an anti counterfeiting strip, and then producing a small fraction of banknotes with the strip.

Using the scenario at the beginning of the post, what if Sweden gets the cash in banks down to about 4 hours, and the supply outside of banks to 4 days.

The people's "demand" is irrelevant in Sweden. If people will want new 500-kr banknotes they can't get them because they won't be in the ATMs.

Now obviously nobody in Sweden is going to riot in the streets (like they would in America). For everyone who writes an angry blog post, three more people write a response that cash is no longer necessary, and they are perfectly happy with the 200-kr banknote for their children and old people. The small banknotes and new coins are sufficient for small purchase.

What would you do? I suspect most people would do nothing.

http://cb.is/payments/notes-and-coi...and-history/
Sweden is just now coming under 2% of GDP for total value of banknotes and coin. Iceland did that by 1975 (and their central bank was only formed in 1961. But Iceland's government did not need to reduce currency to achieve 1%. They had basically hyperinflation (perhaps not as bad as Mexico, but on that scale). By the early 1980's they had to issue a new currency with two zeros dropped from old currency. But they no longer have 1% as the massive bank failures in 2008 made people go back to cash in record numbers.

Maybe I must have been talking to some bad forum members. I was told very confidently by a Swede that no Swede hoards money. I figure if you put 10 million people together, then you have hoarders. It may be that Sweden has a much lower percentage than most countries.

My scenario of the government releasing new 500-kr banknotes at 1.5-2.0 million a month for six months (Jan-Jun 2017) means that most people will be unable to bring their hoard in and exchange them for new banknotes, and redeposit them in their home safes.

I don't know if the government will try to use the 200-kr to minimize the use of the 500-kr. But it sure is convenient that the 200-kr banknote was introduced 15 months before they introduced the new 500-kr banknote.

As I said earlier they reduced the 500-kr notes by 22% since 2009, but they also reduced the 100-kr notes by 25%.


I actually remember in fall of 1992 when Riksbank raised marginal lending rate to 500 percent. My brother was friends with a bunch of Swedish girls who were living in our town. The Crown lost about 40% of it's value against the dollar in a few months. Black Wednesday hit Britain . I remember one of the girls asking me why they were doing this to her, as she was running out of money and might have to return to Sweden early. I said that Germany was trying to borrow all the money in the world to reunify without having to raise taxes, and George Soros was known as "The Man who Broke the Bank of England". Soros briefly set his sights on Sweden. She was very upset as she felt that those things had nothing to do with Sweden,

Looking at larger issues, the government seems to be spending mightily to buy bonds to keep the krona exchange rate low. The negative interest rates won't do much good if the currency speculators drive up the value of the krona.





That is an awful lot of money spent on bonds to prevent the krona from getting stronger against the Euro (which would occur naturally from negative interest rates). Plus there is the promise to spend more. In addition the Euro-zone has it's own QE programs, which weakens the Euro relative to the SEK exchange rate.

In comparison, the current circulation figures of currency are a lot less than 200 billion SEK:

3.925 SEK billion in 1000-kr banknote (1.228 SEK billion in new banknotes)
46.121 SEK billion in 500-kr banknote
16.653 SEK billion in coins and valid banknotes of all other denominations including 20,50,100,and 200-kr.

So hypothetically if the current bond purchases reduces the Swedish crown closer to 10:1 with Euro, could the Riksbank simply peg the Crown to 10:1 temporarily. In 2017 the Riksbank would and only issue a token number of 500-kr banknotes, say about 10 SEK billion (to match the token 2 SEK billion in 1000-kr banknotes).

The 50 Euro banknotes will naturally begin circulating in Sweden to fill the demand, if at least for private transactions. The Riksbank will be relieved of the duty to keep buying bonds to try and control the exchange rate.

Could they do such a thing, and if they do could they undo it easily?

I am glad that I found this thread. I travel to Sweden occasionally for business, since 2010, and became fond of Scandinavian currency. I am collecting, mostly from change, and purchasing from ebay, the older issues, up since late 19th Century. Aside from pre-1919 Norwegian silver coins, I find Scandinavian numismatic items, specially Swedish coins, quite affordable to collect, given low montages on certain years.
Its always exciting to find a1960's or 1970's coin in change for me, given that I live in country which frequently changes coins and paper money in circulation (oldest we have in Turkey now is from 2009, and,before that it was 2005, and before it was 1999) This may give you a point.

I feel sorry that after this year, there will be nee, plated coins in Sweden. They tarnish absolutely horrible and feel very cheap on hand (like 1-2-5 Eurocents) they even may tone ugly inside hard plastic round capsules. Ugh.

Contrary to the thread owner, I really am fond of old design 20kr and 50kr Swedish banknotes. I was raised in the 70's and 80's and back then Nils and the Flying Goose was quite popular in Turkey. I remember reading it when I was about 7-8 years old. It was a very pleasant surprise for me to see that on Swedish 20kr note when I first went there in 2010.

I believe the unusual size and artistic design of the old 50kr is very pretty too. It is in fact my most favorite Scandinavian banknote. After that comes the Norwegian 500kroner and Swedish old 20kr, equally pretty for me.

I remember finding a 50kr banknote without the security foil in Gothenburg back in 2015, an old, worn note that was withdrawn sometime ago. I kept that along with a 2008 50kr.

Last time I was in Sweden, it was December 2015. I found three consecutive new 20kr, and a circulated 200kr. I spent the 200kr, but kept the 20's. One of them is in my folder now, the rest are sitting in an envelope.

I didn't like the new 50kr but I am hoping to find an uncirculated one next time I will be there in May. I will keep it for sure.
I can say I also enjoy the large 5 kronor coin a lot, to th point that I built a date run of them, all from circulation, barring a few low mintage dates (1989, and ones between 1995-1999).

I sometimes ask like 100-200 kronor worth of 5kr coins from cahsiers, to check for dates. I have never been refused, and I have to say Swedes are so helpful for weird requests like that.:-)

Also, there is only once in my lifetime I found silver in circulation, and it was a silver 1kr 1957, from a shop in Malmö train station back in 2012-2013.