Riksbank: Cash Must Be A Protected Legal Right For Good Reason

http://www.talkmarkets.com/content/currenciesforex/riksbank-cash-must-be-a-protected-legal-right-for-good-reason?post=94939&uid=4798

From the article:

Sweden's Riksbank says that cash must be a protected legal right. The central bank of Sweden fears that people will be locked out of the banking system, something I have warned could happen. It is nice to hear it from a central bank, though. A discussion of the shadow economy follows at the end of this article. I am sure that the contribution to GDP by the shadow economy, both legal and illegal, is massive. I am sure that this fact is not lost on central bankers.
Now I can point to the Riksbank as my friends and relatives scoff, and say, see, I told you so. I have been telling them that the existence of cash is important and the talk of banishing it is dangerous and cannot be ignored!
And I have been speaking to the subject of privacy, as all transactions will be tracked in a cashless society. Apparently that is a concern of the Riksbank as well.
Considering that the central bank of Sweden is at the forefront of negative interest on bank reserves, pushing inflation higher for the last three months in a row, it is astounding to me that it wants to protect cash. Most bankers who advocate negative interest on reserves also advocate a cashless society, fearing bank runs. And that could happen if the plunge into negativity is deep enough to be passed on to consumers, and if those consumers believe that those costs are harder to bear than the loss of convenience in maintaining the account.
So, this is a significant political statement on the part of the Riksbank, to seek protection for cash.

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