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In a sign of Europe’s increased focus on financial inclusion, a senior official at the Riksbank has said that "there is neither reason nor time" for the government to delay an intervention in the payments ecosystem.
“Digitalisation has created great opportunities, but also problems in the payments market that require the state, including the Riksbank, to take action,” Aino Bunge, deputy governor of the Riksbank, said during the central bank’s recent seminar on payments.
In the short term, Bunge called for the public's ability to pay with cash to be protected by legislation and said that more people need to have access to payment accounts.
Bunge also said that legislative work on the e-krona — a project that has been ongoing since 2016 — should be initiated, in line with what is happening in the EU.
Financial inclusion was at the centre of Bunge’s intervention, with the banking official saying that for cash to be used in the future, both under normal conditions and in crisis situations, the Riksdag (parliament) needs to regulate where and how it can be used.
Bunge continued that stores should be obliged to accept cash for socially important goods such as food, fuel and pharmaceuticals, and that banks should also be obliged to accept deposits from consumers.
She continued that a number of measures are needed to increase financial and digital inclusion.
“First and foremost, it is important that as many people as possible get a payment account,” she said.
“We also consider that the banks shall offer payment services at reasonable prices that are adapted to consumers who have difficulties using digital services,” Bunge continued, adding that public operators may need to help individuals with payments, for example at service centres or citizen advice bureaus.
More needs to be done on instant payments
Bunge also called for action to be taken on the topic of instant payments.
Such an intervention may seem odd in Sweden, considering the success of instant payments with Swish.
“Swish enables instant bank transfers and is a valued service used by many, but we need more fast and efficient payment services,” she said.
Here, Bunge noted the trend toward instant payments is now accelerating abroad, considering legislation at EU level for instant credit transfers in euro.
“This kind of legislation may also be needed here if the banks are to develop more ways to make fast payments,” she said. “It is important that Sweden does not fall behind in the development.”
Payments and contingency
Bunge’s intervention sums up the Riksbank’s interest in payments this year, which has largely revolved around a need for preparedness and contingency.
“Payments are becoming increasingly important on the political agenda in Sweden. Mainly due to the effects of digitalisation and that Sweden is trending towards becoming a cashless society,” said Jens Olsson, a fintech advisor based in Stockholm.
Olsson told Vixio that there is some debate about whether Sweden will fall under the definition of being cashless. “Nevertheless the trend is clear and the marketplace is seeing some of its effects already.
“The Riksbank’s view is that payment infrastructure is the state's responsibility. Just like other important infrastructure in society, the state should have a clear and ultimate responsibility for payment infrastructure,” he said.
However, Olsson said that it is important to note that the public and private sector should co-exist.
“The private sector would continue to stand for the whole service layer and parts of payment infrastructure in the payments market,” he said. “These are integral for having a compelling value-proposition, innovation and efficient distribution in the marketplace.”
For example, in June, the central bank launched a consultation on the matter of civil preparedness for payments.
The consultation was triggered by the Sveriges Riksbank Act, which came into force on January 1, 2023.
This gives the Riksbank a responsibility to ensure that the public can make payments during peacetime crisis situations and at times of heightened alert.
In practice, this means that the Riksbank will carry out work around civil contingency planning for payments.
In addition, the Riksbank may impose requirements on companies that conduct activities that are of particular importance for making payments, which means that they must both carry out internal work and participate in the Riksbank's work on civil contingency planning.
The Riksbank is not alone in its concerns about contingency.
The neighbouring Norwegian central bank raised similar concerns in May this year, suggesting that contingency measures need to be strengthened due to increased cyber risks.
