In Sweden, cash is king no more

Sweden was the first European country to introduce bank notes in 1661. Now it's on the path toward getting rid of them.

The contours of such a society are starting to take shape in this high-tech nation, frustrating those who prefer coins and bills over digital money.

In most Swedish cities, public buses don't accept cash; tickets are prepaid or purchased with a cell phone text message. A small but growing number of businesses only take cards, and some bank offices — which make money on electronic transactions — have stopped handling cash altogether.

"There are towns where it isn't at all possible anymore to enter a bank and use cash," complains Curt Persson, chairman of Sweden's National Pensioners' Organization.

That's a problem for elderly people in rural areas who don't have credit cards or don't know how to use them to withdraw cash.

In the Carl Gustaf Church in Karlshamn, southern Sweden, Vicar Johan Tyrberg recently installed a card reader to make it easier for worshippers to make offerings.

"People came up to me several times and said they didn't have cash but would still like to donate money," Tyrberg says.

Bills and coins represent only 3 percent of Sweden's economy, compared to an average of 9 percent in the eurozone and 7 percent in the U.S., according to the Bank for International Settlements.

The Swedish Bankers' Association says the shrinkage of the cash economy has impacted crime statistics.

Bank robberies in Sweden plunged from 110 in 2008 to 16 in 2011 — the lowest level since it started keeping records 30 years ago. Security transport robberies are also down.

"Less cash in circulation makes things safer, both for the staff that handle cash, but also of course for the public," says Par Karlsson, a security expert.

Constrained means 'restricted' somehow?

Yes; "limited" would be a better word. In essence, you aren't going far enough :-)

I think computer virus makers have the potential to take down whole sections of the economy and cost billions, and ruin millions of lives.

I think I'm reasonably well acquainted with computers; from that point of view I think that "computer virus makers" can't inflict much damage. That's exactly what is [not] happening - and banks are securing their computers more and more with every passing day.

The e-thief can steal your password; but that won't be enough. Some banks require two-factor authentication (something that you know and something that you have.) As the latter, they give you a little USB dongle that (roughly speaking) contains one very long number. You have to have this dongle to successfully answer the auth challenge. It is extremely difficult to break such a system; there was only one published case of such a compromise - and most likely it was done by a state-level player, so complicated it was (required physical presence of agents of the attacker - in other words, spies were needed within an access controlled facility.) John and Jane Doe don't need to worry about such a thing; if anyone on that level wants their secrets they will do it much faster with a rubber hose.

If John Doe's bank doesn't offer those dongles then it requires something else. For example, multiple passwords, or registration of computers. This prevents a hacker from accessing the bank from his remote location (wherever in the world he is.)

But even if we imagine that the hacker steals the password and then uses the victim's computer to access the bank online... most people in this country have under $1K in their account. They might be richer than that, but banks are paying so little interest these days that it makes no sense to keep any serious money there.

Secondly, the attacker has to transfer the money somehow; it is not always possible to do online. I can pay bills online, to known local companies. But if I need to do a wire transfer abroad then I think I need to show up at the branch office and sign some papers. The clerk will check my ID. (I don't do it often, but that's what I remember.)

Thirdly, banks protect you from an e-theft by indemnifying you, as long as you do your part reasonably well. Banks aren't in much risk there because the rate of e-thefts is very small; but it helps banks to gain and retain clients.

Fourthly, electronic money is a far cry from gold coins in a purse. If those coins are gone they are gone for good. However all electronic transfers are recorded, and the money can be easily traced to the bank that actually cashed it. There aren't very many banks that will protect a fraudster - if they do they will be cut off from SWIFT (ask Iran how that works.)

To summarize, small fish (John & Jane) are not interesting because they have nothing to steal, and large fish (say, institutional accounts in large banks) are not accessible online; they are hardly even accessible in person. Each corporate account has only few authorized check writers; everyone else will be escorted out of the bank, right into the hands of police.

I guess e-theft is possible by stock brokers and other money managers. But they are insiders; if you don't trust insiders (such as your banker) then you can't trust anyone. A hacker from China or Russia will not be able to get far. Not all banking systems are even connected to the Internet (and why should they be?) You can't hack into a computer that is not connected.

Imagine hospital equipment suddenly failing, for example.

Such a feat will be on par with the virus that disabled Iranian centrifuges that were making bomb materials. That virus - now dissected by hundreds of researchers - is a work of art that could be produced only by a nation state.

Hospital has thousands of units of equipment, all different and all used in a different way and all powered up and down as needed. It is nearly impossible to get inside the hospital's LAN to begin with (without an insider, which again requires a spy - not something that a hacker is likely to have.) But even if you do get access, how will you know what is what and - most importantly - what is your benefit from messing the equipment up? You can inflict financial damage, or you can murder a patient. Why would a hacker commit a murder? Hackers are not illiterate, brainless dregs of the society; most are pretty smart. They can do things for bragging rights, but they can't brag about killing someone. They can do things for money, but there is no money in such a thing. They can do things for fun, but very few people murder other people for fun - and those that do they prefer to kill in person. A hacker would never know if his attack was successful; but if it was, he will be a hunted man. There is simply no upside.

Or your life savings gone.

We don't need foreign hackers to achieve that. Domestic hackers are sitting in high offices of the country, and they don't even need computers to destroy our life savings. They only need a pen.

After you read the story on the website check this post that appears below it.

If you didn't click on the "Comments" link you would never KNOW the following.

by Fredrik_Andersson March 19, 2012 11:22 PM EDT

Guys. I live in Sweden, and this is totally bogus. The article is a PERFECT example of how you create a trend in the media by picking only the details you like. Bjorn Ulvaeus says something, and you pick up on that. A church installs a credit-card reader, and you pick up on that. Etc.

I have NEVER seen a church accept credit cards. This must be the only one. But you don't see the journalist write about the many thousands of other churches. And he doesn't write about the tens of thousands of businesses that accept cash.

You see only a few small details. And since that's all you see, and Sweden is far away, you think they show the reality. But here in Sweden, I have never in my life heard of "Sweden moving toward cashless economy." Ridiculous. Of course we will keep using cash.

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