by Eric J. Lyman
Most transactions in European countries remain cashless. But the adoption rate for them has leveled out, and now the government is creating incentives to stabilize the current level of cash usage rather than letting it fall further.
Sweden has led the way in Europe's transition to a cashless economy, being among the first to have credit or debit card readers at points of sale – even for something as low-cost as a newspaper so that customers no longer had to dig in their pockets for coins or paper currency.
But now, the country that led Europe’s modern march toward a cashless society is among those reconsidering that journey amid growing concerns about cyberattacks, conflict, power outages, privacy and national resilience.
Increasingly, policymakers in Sweden and other countries that have been pushing the trend, including Denmark, Estonia, Finland and the Netherlands are realizing that cash still matters.
Most transactions in these countries remain cashless. But the adoption rate for cashless transactions has leveled out, and now the government is creating incentives to stabilize the current level of cash usage rather than letting it fall further.
“We now need to think about resilience,” Erik Thedéen, the governor of Sweden’s Central Reserve Bank, said last year. “If everything breaks down, we need to have cash.”
Official government guidance in “emergency preparedness” brochures sent to Swedish households recommends citizens maintain at least one week’s worth of cash to be available in a time of crisis. Other early adopting countries are taking similar steps.
Thedéen said the reversal was sparked by a destabilized globe in which exists the threat of an expanded war between Russia and Ukraine, the threat of digital attacks, and signs from President Donald Trump that the U.S. may not come to the aid of its European allies if they were attacked. Thedéen said the country’s advanced digital payment infrastructure could make it more vulnerable.
The shift does not mean Europeans are abandoning digital payments. Credit cards, mobile wallets and instant-payment apps continue to dominate everyday commerce, and few expect cash to regain the ground it has lost over the past two decades.
But most of the European Union still trails the northern European member states, where 90 percent or more of all transactions are conducted without the use of cash. In comparison, the European Union surpassed the 50-percent threshold for cashless transactions only last year.
Among the European Union’s biggest economies, Italy was the laggard, ranking 21st in the 27-nation bloc in terms of frequency of cashless transactions, while smaller countries including Greece, Romania and Bulgaria remained below 30 percent.
Leaders still see overall adoption rates for cashless transactions increasing even if they level out in the countries that were quickest to adopt them.
“The digital euro is not just a means of payment, it is also a political statement concerning the sovereignty of Europe,” said Christine Lagarde, the head of the European Central Bank.
Cashless transactions are still broadly favored by governments because they reduce the reach of the black-market economy and make transactions traceable. Advocates say they also enhance security against physical theft and increase convenience for shoppers and vendors.
Eric J. Lyman
Source: https://justthenews.com/index%2ephp/world/europe/europes-cashless-revolution-slows-amid-worries-instability-conflict
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