Norway's Government and Central Bank Push for Cash Use

Norway, known as one of the most cashless economies in Europe, is making a significant shift in its stance on cash. The government and central bank are aiming to slow down or even reverse the trend of cash abandonment. According to a recent survey by the central bank, only 3% of Norwegians used cash for their most recent physical store purchase.

New Legislation to Boost Cash Use

In an attempt to change this, a new amendment to Norway’s Financial Contracts Act was introduced on October 1. This amendment strengthens citizens’ rights to pay with cash in retail settings. The legislation is expected to put an end to the "we only accept cards" signs commonly seen in shops across the country, according to the Norwegian online newspaper Nettavisen. The central bank of Norway, Norges Bank, has provided clarification on its website about how the new amendment will enhance customers’ right to pay in cash. The bank has also stated that retail businesses that refuse to comply with this change could face financial penalties.

Financial Inclusion and Resilience

One of the primary reasons for the legislation is to support the estimated 600,000 people in Norway, equivalent to about 10% of the population, who find it challenging to use digital payments. These individuals have been increasingly excluded from the retail economy. Cashless economics is often promoted as a way of encouraging financial inclusion. However, in reality, there is no more inclusive form of payment than cash. In addition to ensuring that people are not excluded from participating in the economy, the new amendment aims to provide the economy with greater financial resilience. In a press release from the Ministry of Justice and Public Security in April, the importance of cash as an "always on" payment option was highlighted. This ensures that Norway’s economy will not be completely inaccessible in the event of prolonged power outages, system failure, or digital attacks against payment systems and banks.

Protecting the Right to Use Cash: A Growing Trend in Europe

In recent years, several countries in Europe have passed or proposed legislation to protect citizens' right to use cash as payment. These include Switzerland and Austria, where cash is still widely used, as well as Slovakia, which passed an amendment to the constitution last year to protect physical payments from a future where the digital euro becomes mandatory. Sweden, which is arguably even more cashless than Norway, has also seen its central bank call on the government to adopt urgent measures to strengthen cash's role as a means of payment. The central bank has stated that "it is not enough to simply take measures to strengthen the availability of cash through withdrawal requirements and new depots, it must also be usable."

Challenges Ahead

The central banks of both Sweden and Norway now face the challenge of trying to slow or even reverse the mass abandonment of cash, a trend that they themselves helped initiate. This will be a difficult task, given that much of their respective countries’ cash infrastructure has been allowed to deteriorate over recent years. It also remains to be seen whether enough Swedish and Norwegian citizens are prepared to re-embrace cash if it is made more available and easier to use. While demand for cash in Norway has risen slightly over the past year, it is unclear whether this is a sustainable trend.

Bottom Line

The fact that Norway and Sweden, countries that have largely removed cash from their economies, are now warning about the dangers and vulnerabilities of a fully cashless economy should be taken seriously. The urgent need to protect both access to and use of cash is not just a concern within their borders but beyond them. What are your thoughts on this significant shift in stance towards cash use in these countries? Feel free to share this article with your friends and discuss it. Don't forget to sign up for the Daily Briefing, delivered every day at 6pm.