Cashless Sweden And Coin Collecting

The Swedish constitution partly includes the 1974 Instrument of Government (Swedish: Regeringsformen) which made the Bank of Sweden independent, and allowed the Bank to determine the amount of cash that could be printed. The 1975 Act specified that the Bank had to produce a 10,000kr banknote.

Over a two decade period the value of banknotes in Sweden jumped from
1968 10.581 billion SEK
1988 59.451 billion SEK similar to what it is today
The 500kr banknote was not produced until late 1985

The 10,000SEK banknote was made invalid in 1991, but the 1000SEK banknote peaked in circulation at 48.358 billion SEK in 2001. Presently that denomination is at 2.547 billion SEK.

You would think that it would make sense to simply eliminate the 1000SEK banknote instead of printing such a small number. But (1) the Riksbank may not have the authority, (2) the complete elimination may be a bad public relations with the traditionalists, (3) the Riksbank may have millions of notes in storage in case of a national emergency. The Riksbank considers production quantities to be a secret.

The most extreme position I could imagine the Riksbank assuming is turning the 20kr banknote into a coin, and having only minimal numbers of the 500kr and 1000kr banknote and keeping only three denominations: 50kr, 100kr, and 200kr in wide circulation. But it would seem foolish to let the value of banknotes drop below 1% GDP (about 4000SEK per capita today). In the event of national emergency there would be no infrastructure in place to handle cash.

Are you expecting Norway to adopt a similar policy with their new series of banknotes?

Well the cerebrus may have similar goals about using less cash for transactions, but Norway and Denmark have a lot more cash in circulation.

Without adjusting for population and relative exchange rates (with obviously 20 kr being a coin for two countries) here is the cash in circulation. Sweden as of 8/31/2016 and Norway and Denmark as of 12/31/2015.

 SEK	 NOK	 DKK	kr millions
   956	 1,760	 2,512	  20 kr
   942	 1,093	 1,234	  50 kr
 5,463	 2,154	 4,657	 100 kr
 5,021	 6,056	 6,081	 200 kr
39,586	18,355	15,994	 500 kr
 2,672	17,947	35,649	1000 kr
54,640	47,365	66,127	

I don't know how mainland Norway is defined.

Norwegian Annual national accounts 2015
Gross domestic product (GDP)
NOK billion 3 117
GDP for mainland Norway
NOK billion 2 620

Sweden Annual national accounts 2015 GDP
SEK billion 4 181

Sweden Annual national accounts 2015 GDP
DKK billion 2 922

Denmark has a lot more kr per capita and the nominal value is much higher. In addition they have far more 1000kr banknotes. But many foreigners hold the Danish cash as speculation that the Danish central bank will be forced to break their link to the Euro.

In addition to fighting crime the Riksbank does very much want to keep similar speculation to a minimum.

'Mainland' Norway is usually all territory Norway claims but without Bouvet Island, Queen Maud Land, Peter I Island, Jan Mayen and Svalbard. The latter has its own currency, by the way, the former ones don't need it, as they are considered uninhabited. Svalbard generates quite some turnover due to the mining industry there, but I can't imagine 500 billion NOK is turnovered there annually. Perhaps also some of the oil industry is taken into that part?

Technically, these 'larger' notes might still formally be considered to be 'in circulation', but I can't recall the day I last saw a 1000NOK note in the wild... Most cash machines here will rather dispense 500 notes instead. A lot of 1000s are stored with the national bank, for what I know. In addition, Norway is following Sweden with introducing new banknotes, so there will be significant changes as well when the new ones come out. I don't know about Denmark here, but I guess they'll follow soon. As usual.

I also do believe that the NOK is mow much less interesting for foreign investors after losing about half of its value in two and a half years due to the oil price crash. It shows how vulnerable our economy is and how single-minded, in a way. We couldn't make up for the oil losses with our salmon and Christmas trees... Perhaps this can be seen in the amounts of cash being 'out there' in the later numbers, too.

I fully agree on Japan being ridiculous in a way. I don't really get the point of having that much cash around. Same for Hong Kong, by the way. Although... I visited those countries quite frequent in the past years and I never noticed that it was more cash-oriented than card-oriented. In fact, card was preferred more than cash for larger sums in both places.

The latest Riksbank statistic on cash has an extra column to show how many of the older denoms are still in the wild.
Surprisingly, there are 1,618 Mio. ''invalid'' 1000kr still in the wild.

We will get a clearer picture of ''cash in Norway'' when the new banknotes will enter circulation. Same goes for Sweden when the 100kr and 500kr will enter circulation in October.

The NOK is more interesting to currency trades (and people who don't trust the EU/ECB) than the SEK because Norway isn't part of the EU. So, if you want to diversify the NOK is a relatively safe haven. So, I expect more NOK 1000kr notes in the wild than 1000 SEK notes.

The huge number of 10000 JPY in circulation is easily explained: Negative interest rates in Japan.

Believe it or not, but having cash at home is very, very uncommon here in Scandinavia. I only know one person who actually saves in cash and he is considered a bit 'special' in many ways. It may be very hard to understand for Americans that such countries and societies exist, but they do. There are huge differences between the States and Norway. trust me, those Swedes you talked to are right: there are no hoarders here when it comes to cash, except the numismatists. But that's for a different reason... I actually doubt if banks calculate negative interest right now. Here in Norway it's simply 0% at the moment for most banks and account types, and interest on mortgages is just under 2%, depending on the type of mortgage.

You can simply forget that Norwegians and Swedes would hoard any other currencies than their own. First of all, it's impossible to get hold of here without going bankrupt on fees and second, most Scandinavians trust their currency much more than for example the Dollar or Euro.

The same goes for the 'underworld' you are so sure also exists in Norway. Obviously, you have never visited this country (please feel free to come here any time!). The only 'underworld' we have here exists in Oslo, in a way. This is a country where everyone knows everyone, especially outside Oslo, and even everyone's tax records are public information. So when people suddenly come up with a new car or a new boat, then trust me: it will be talked about and things will be double checked and if things aren't trusted, you bet there will be an issue made of it.

Now, for Oslo, which is a village with roughly 500.000 citizens and 1 million (or about 20% of the total population) if you include the suburbs. There people can be a bit more anonymous. There you can find some organized crime. But again, the 'bad' neighborhoods like 'Grønneløkka' can still be accessed at night without getting shot. It's really not America. The trouble with an all-controlling government though is that really all is under control, with the exception of a lone wolf like Breivik.

Now, as said, I have seen a documentary some time ago in which the Norwegian bank stated that a lot of banknotes are stored now, especially larger denominations (I just can't find the source anymore, and that's frustrating). Those thus do count towards your numbers, but are in practice not available. As you already stated: no new notes have been issued since 2006, which is already over a decade ago. New notes are on their way, but I think we can all agree that 10 years is a horribly long time for a note to circulate. And then again, they just don't exist in the wild anymore...

I can actually guess what Sweden will do when it comes to those new banknotes: they won't be there. At the end of the day the amount of electronic payment systems may prove larger than the number of high denomination bank notes. Which says a lot about how many of those new initiatives there are, by the way.

For those 'invalid' bank notes, I think the Swedish Riskbank played a very, very dirty game. Almost as soon as the new notes were put into circulation, the old ones were demonetized. I think there were just a few weeks between those moments. So even I am stuck with a small amount of useless Swedish paper now, and I guess that goes for more people who weren't fast enough to trade them in: going all the way to Sweden to trade them in simply isn't profitable. These are not exclusively criminals. From my travels I do know that sometimes you just get stuck with a lot of cash, especially as a foreigner who doesn't have access to other local payment systems than cash, you just sometimes happen to export larger quantities of money. If you haven't had the chance to visit Sweden at the moment of the swap or if you are simply still unaware of it, then you have a serious issue now. I do have gotten rid of all my other 'old' Swedish bank notes, by the way, so when the other ones are introduced, I won't have damages anymore.

From that respect, countries like the US, Germany and Netherlands are simply much more generous. Netherlands recently demonetized a (I think) 30 year old 100 gulden banknote and the De Nederlandsche Bank made a huge public statement out of it and made sure the public knew how they could trade them in. Despite not living there anymore, even I knew what and how was going to happen. That doesn't have anything to do with fighting crime, that has a lot to do with being humane.

Just my Two Cents.

Short reply:

- yes, I should have been more specific on the 1000 NOk instead of 'new banknotes'. With that specified, I stick to my statement.

- We all know where to find the 'underworld' in Norway. It's largely in Oslo, around the dentral station, Rådhusgate and Kirkegate. In addition, you may be interested in Grønneløkka. The biggest crimes in Norway take place outside Norway, with payments taking place from and to accounts on for example the Cayman Islands. Every now and then someone gets caught there, usually by living a life that's not in line with being Norwegian.

- Agreed that the 1000SEk is on it's way out fast. the 1000NOK will be replaced and that will cause a 'huge' turnover of that what actually is in circulation. Again, of those 17 million notes, expect over half to lay with the central bank now, just waiting on a shelf catching dust.

- Crime fighting was actually stated as one of the major goals. I'm pretty sure that the governments are also very interested in keeping money circulating, as the economies here in Europe seem to have gotten stuck quite a bit.

- Iceland was in quite a different situation than Norway and Sweden are today.

Might have time to reply more in depth later on.

Actually some of them could be on the shelf of commercial banks, but they are not on the shelf in the central bank. "Banknotes in circulation" represent a liability to the central bank. If they are in possession of the central bank they don't represent a liability.

A total of 17.9 million notes over 5 million people actually represents fairly low circulation as banknotes go. It wouldn't surprise me if you never see one. The USA circulates roughly 36 $100 banknotes per capita, and many people never use or see a banknote over $20.

I realize that Sweden and Norway are much more stable than Iceland, but it's a good example of how fast a situation can change.

Possibly Norway is content with the current level of cash circulation. It is still very low compared to the rest of the world. But what is your personal feeling, do you think Norway will copy Sweden's efforts or keep roughly the same level of circulation?

Per capita circulation
€650 Sweden
€1100 Norway
€1100 Iceland
€1300 United Kingdom
€1500 Denmark

Certainly.