Financial Inclusion Sweden Edition: From Banks to Microwaves

The Philippine government, mainly through the BSP, has been pursuing measures to promote allegedly “inclusive growth” via “Financial inclusion”—which is the formalization of the finances of the informal sector through formal financial institutions supervised by the central bank. [In my view, this represents a subtle war on the informal sector, as a first step]

The Swedish government’s recent actions have taken financial inclusion to more advanced levels, they reveal of what financial inclusion has truly been about—financial repression at its finest! Said differently, the Swedish experience reveals its real purpose...the outright confiscation of society's resources!

The Swedish experience have not been limited to only negative interest rates (and the recent QE4) but on efforts to push for a cashless society through…what else….the abolition of cash! 

A cashless society should be a nirvana for central bankers as they would be in total control of everyone’s resources!

I have posted a similar version earlier but my emphasis was on the war on interest rates.

Austrian economist David Howden at the Mises Blog has a trenchant insight on the Swedish government’s ongoing 'war on cash'. (bold added)

It used to be that central banks were constrained in setting monetary policy by the zero lower bound. Nominal interest rates cannot fall below zero because people would just hold cash under their mattresses instead.

Of course, if the existence of cash is getting in the way of monetary policy why not just eliminate cash completely? 

Sweden is the first country to experiment with negative interest rates in a cashless society. 

The Swedish central bank held its benchmark interest rate at -0.35% today, the level it has been at since July. 

Although retail banks have yet to pass on that negative to rate to Swedish consumers, the longer it’s held there the more financial pressure there is for banks to pass the costs onto their customers. That’s a problem because Sweden is the closest country on the planet to becoming an all-electronic cashless society. 

Remember, Sweden is the place where, if you use too much cash, banks call the police because they think you might be a terrorist or a criminal. Swedish banks have started removing cash ATM machines from rural areas, annoying old people and farmers. Credit Suisse says the rule of thumb in Scandinavia is: “If you have to pay in cash, something is wrong.” 

Ironically, this latest episode of the war on cash has benefitted one sector of the economy: microwaves. 

A resistance is forming, and some people are protesting the impending extinction of cash. Björn Eriksson, former head of Sweden’s national police and now head of Säkerhetsbranschen, a lobbying group for the security industry, told The Local, “I’ve heard of people keeping cash in their microwaves because banks won’t accept it.” 

Let´s hope that using a microwave doesn´t come to be seen as a suspicious act warranting a call to the police in Sweden.

Well, a “resistance is forming” and microwaves as household cash vaults/boxes are simply symptoms of financial inclusion morphing into financial exclusion. 

And the escalation of political crackdown on people's savings through cash, directly and indirectly, will only fuel more opposition. 

Oh, expect an economic-financial downturn or a crisis to intensify governments everywhere to push for a war on cash, and equally, the vehemence of its drawback.

And that emerging “resistance” movement may be ventilated in politics (first as lobby, then on the streets) as the public will most likely take on other unorthodox options to preserve one’s savings.

Think foreign currency (for the average Swedes, instead of the krona, they may save in "cash" in their household "microwaves" through the euro, the pound, the US dollar), bitcoins and or gold/precious metals. Local physical currency alternatives may also emerge in parallel with the krona.

Financial repression will only push people out of the formal institutions.