This lecture introduces digital cash,
one of the Capstone topics. It takes it outset in the emergence
of a new type of central bank money, namely digital cash. Why are central banks
looking into digital cash? We draw upon an inspiration from
Sweden where the central bank just released a report on e-crimes. In the remainder of the lecture I
will contextualize digital cash and give a historical account of Sweden's
progress towards the cashless society. So what is happening in Sweden? The starting point is 1661 when Stockholm
Banking issued the first banknotes. These banknotes replaced the copper dollar which was cumbersome to use
due to its weight, 18.9 kilo. However, Stockholm Bank issued
too many bank notes and was forced into bankruptcy
after a few years. So the Swedish king had to step in, and he form the world's first central bank,
Riksbanken in 1668. So now we are entering what
we label as the cash age. This is the time when cash was primary
medium of exchange and store of value. Cash peaked on the 21st of
December 2007 in Sweden. After that moment in time, cash has rapidly declined from 97 billion
crowns to 47 billion Swedish crowns. This decline is unique in the world and
Sweden is about to become cashless. So how could cash vanish? There are many interrelated
events explaining this. The Swedish story is unique but there are similarities to most other
countries and those that you come from. And those events that shapes, transforms
a country into a cashless society is part of the problem definition
of a Capstone Project. This witty story started with
digitalization of accounts in the 1960s, and the emergence of payments comps. Now we are around the millennium and several things happened that
contributed to the death of cash. In the early 2000s, there was a numerous of robberies of
banks, postal offices, and cash depots. The peak was the Vastberga helicopter
robbery on the 23rd of September, 2009. The robbers landed on G4S cash depot
in Stockholm and robbed the place. The picture shows
the actual helicopter used. One of the consequences of robberies
was that different unions around Sweden demanded cash free work places
to protect the union members. In 2007, two new legislations,
ROT and RUT, which made it possible for people to get
tax deductions on different home services. So there was no need for
cash to pay handymans under the table. The final events that made cash obsolete
were the introduction of Swish, a mobile payment solution, and
the exchange of bank notes. Today Sweden is an almost
cash free society. So what, from the central bank
perspective, this creates an issue. Since one of the roles and responsibilities of a central bank is to
ensure safe and efficient payment system. And without cash, there's no
alternative to commercial bank money. Thus the risk increases
in the payment system. This is why Sweden central bank
is looking into digital cash.