Swedish Central Bank Wants Answer to What's Legal Tender, Fast

(Bloomberg) -- Sweden’s central bank wants lawmakers to answer what exactly constitutes legal tender and said that time is running short.

The world’s oldest central bank called on parliament to create a committee to review “the concept of legal tender” and the role of central bank money in a digitalized economy.

“For 350 years, Swedish society has relied on the Riksbank to provide the general public with various forms of the country’s currency, the Swedish krona,” it said in a statement. “Cash issued by the Riksbank has been legal tender since the 1850s. Cash use has decreased rapidly in Sweden and a scenario within the not-too-distant future, in which cash is not generally accepted, can’t be ruled out.”

Sweden is becoming a guinea pig in what constitutes legal cash in a digital world as the Nordic country’s citizens flock to credit and debit cards and other digital payment services. Many bank branches have now stopped offering money withdrawals as stores and restaurants are phasing out cash. Some people are finding it difficult to cope without access to mobile phones or bank cards. There are also fears around what would happen if the digital payments systems suddenly crashed.

The Riksbank is exploring its own digital currency, while legislators are leaning toward forcing banks to handle cash.

The Riksbank said the committee should have “all-round expertise” and come up with the needed legislative amendments “so that Sweden continues to have a stable and efficient payment market.”

The bank added that “time is of the essence.”

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