ECONOMICS
Rethinking Cashless Societies
Balancing innovation and security
In recent years, Sweden and Norway have stood at the forefront of the global transition toward cashless societies, showcasing how a nation can benefit from digital payments, reduced cash-related crime and the economic efficiency of electronic transactions. Yet, recent geopolitical shifts and heightened security concerns, particularly around Russian cyber influence, have prompted both countries to reconsider their fast-paced digitalization of money.
A new era of digital payments in Sweden and Norway
For the past decade, Sweden and Norway have been celebrated as pioneers of the digital payment movement. In Sweden, more than 85 percent of all transactions are now conducted electronically, and the country was set on a path toward becoming cashless by 2025.
Norway isn’t far behind; in fact, cash makes up less than 4 percent of their transactions, with most people relying on apps like Swish in Sweden and Vipps in Norway for everything from paying friends to buying groceries.
This shift has been driven by the convenience, safety and transparency digital payments offer. Bank branches have removed cash services in many areas, and even rural shops and small vendors prefer digital transactions, as they’re easier to track, and arguably more secure, than handling cash. For both countries, going cashless has seemed like a logical, modern move — until recently.
Growing security concerns and Russia’s influence
The movement to eliminate cash, however, has exposed some major vulnerabilities. Sweden and Norway are now facing an unexpected threat to their digital systems — and it’s coming from outside their borders.
With the ongoing Russia-Ukraine conflict, and a long history of cyber tensions between Russia and Western nations, Sweden and Norway are increasingly concerned about how dependent their societies have become on vulnerable digital systems.
The Swedish Security Service (SÄPO) has explicitly named Russia as one of the country’s most significant security threats, and Norway’s National Security Authority (NSM) has issued similar warnings. In both cases, the concern is that a nation-state could leverage cyberattacks against digital payment systems, halting transactions and disrupting daily life. The entire economy could come to a standstill, leaving citizens unable to access essential goods and services.
Cash as a safety net
In light of these concerns, both Sweden and Norway have been reconsidering the role of cash as a “safety net” or backup in case of a large-scale cyberattack. Sweden’s Civil Contingencies Agency (MSB) has recently emphasized the importance of cash as a “last-resort” means of trade in case digital systems go down, stressing that a cashless society is potentially too vulnerable in the face of hostile threats. Norway’s Ministry of Justice and Public Security has echoed these concerns, advising that, for resilience, cash should still have a place in society.
This marks a major shift in thinking for both countries. For years, digital payments were encouraged and celebrated, but the current geopolitical situation has underscored the role cash can play during a crisis. In times of war, natural disaster, or prolonged power outages, cash transactions can help sustain people and businesses when digital networks are compromised.
The role of central banks and emergency policy adjustments
The central banks in both Sweden and Norway have already started to adjust their policies in response to these heightened security concerns. The Riksbank, Sweden’s central bank, which had been pushing forward with its own digital currency, the e-krona, now acknowledges the critical role cash plays in national security and continuity. The Riksbank is considering increasing cash reserves across critical infrastructure points and ensuring that ATMs and cash services are more available in rural areas, where they have steadily disappeared in recent years.
Norway’s central bank, Norges Bank, along with the Norwegian Financial Supervisory Authority, is now encouraging banks and retailers to maintain some level of cash-handling capabilities. In a striking move for a country so digitally advanced, they’ve asked financial institutions to support cash handling as part of a national resilience plan. The goal is to be ready, just in case an emergency would make digital payments inaccessible.
Toward a balanced approach: the emerging Nordic model
In reassessing their cashless ambitions, Sweden and Norway may be paving the way for a hybrid model, blending the convenience of digital payments with the stability of a cash reserve. This doesn’t mean they’ll reverse their technological progress, but rather they’re working to find a middle ground where digital systems remain the primary mode of transaction, while cash reserves serve as a form of economic insurance.
Experts have pointed to this blended approach as a way forward for other countries that might be headed toward cashless economies. While digital payments provide benefits in terms of efficiency, speed, and crime reduction, relying solely on them creates risks that no nation can ignore, especially in the face of cyber threats from hostile foreign actors.
Countries like Japan and some within the European Union are taking note, observing how Sweden and Norway navigate this complex terrain, where innovation meets national security.
Rethinking cashless goals in a changing world
In their bid to eliminate cash, Sweden and Norway’s security concerns have opened up a new dialogue about what it means to be a truly resilient economy in today’s world. While they were once global trailblazers for a fully cashless society, the reality of cyber threats and geopolitical tensions has introduced an element of caution.
]Today, both countries are rethinking their strategies, balancing their vision for a cashless future with the need for security and preparedness. This pivot is a testament to their commitment not only to progress but also to the safety and stability of their people, setting a potential precedent for other nations to follow.
