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The Myth of Denmark's Cashless Society

In debates about the future of cash money, Denmark is often cited as the possible World’s first cashless society. Is that true? An investigation on the current state of cash in Denmark. 


Cash is dirty.
Cash is expensive to print.
Cash is for criminals.


Opponents of paper money, such as established economists Bofinger and Haldane, have declared the war on cash. In 2016, this is more apparent than ever before. The European Commission for instance currently assesses a potential ban of the 500 Euro banknote, as “these notes are in high demand among criminal groups.”


More so the finger is often pointed to Scandinavia, to show how some countries are already on the move to become ‘cashless societies’ – to eliminate cash whatsoever. And Denmark could be the World’s first. Hold up – is that true?

Electronic payments as the future?


In comparison to many other European countries, Denmark’s use of electronic payments is indeed on the forefront. You can use your Credit Card almost everywhere – in the bakery next door, late nights in a club or when buying organic greens on the local market.


Electronic payments are convenient – it’s quick, you don’t need to worry about if you have enough money with you or that your money could be stolen. In 2013 Denmark’s biggest bank, Danske Bank, developed an app called ‘MobilePay’, through which you can make money transfers with your smartphone. Last year, almost half of the population used it.


In May 2015, to the suffering of paper money supporters, the former government proposed a law that would have allowed most stores, restaurants and gas stations to decline the acceptance of cash, starting January 1st , 2016. Only some retailers such as post offices, pharmacies or supermarkets would have been exempted.


Considering, the elimination of cash would have tremendous consequences. To mention one argument: with only electronic payments, all transactions would be recorded, exposing all money transfers to the total control through the state and company’s. Cash advocates speak of a direct threat to everyone’s freedom. However, the proposal did not find a majority in the parliament at the time.

No specific goals


Most interestingly, through an e-mail correspondence with the press advisor of the Danish Ministry of Business and Growth, it was stated that the government does not have the specific goal of reaching a cashless society as of today. Currently, the Danish Payments Council, the ‘Betalingsrådet’, chaired by Denmark’s Nationalbank, is studying the role of cash in the Danish society and is analyzing its present legislative framework. The Ministry is awaiting the results of this working group, to be expected during the summer of 2016, before any further initiatives would be considered.


When contacting the Nationalbank to further investigate the ongoing work of the Danish Payments Council, Julie Holm Simonsen, Secretary and Communications Manager informed Iutland Stationthat the Betalingsrådet also has no recommendation of abolishing paper money to be made to the Danish government “on the table.”


To pause here – now the total end of paper money in Denmark seems further away in the future as perhaps thought.

Alternative Payment Methods – Virtual Currencies?


In the quest for the ideal payment method, cash-supporters are united with progressive virtual currency users, who likewise want to be free and independent from the control of governments. A virtual currency as defined by the European Central Bank is “a type of unregulated, digital money, which is issued and usually controlled by its developers.”


The most prominent virtual currency is called Bitcoin, consisting out of algorithms, generated through a complicated computer-program, decentralized from any kind of banking system.


In 2009, Bitcoin was invented by Satoshi Nakamoto, a pseudonym for an individual or group of people nobody knows the identity of. The act of creating Bitcoins is called ‘mining’, which needs an ever increasing amount of processing power. According to Nakamoto, there will never exist more than 21 Million Bitcoins; then the maximum amount of what is possible to create is reached.


Bitcoins as the solution?
Claudio Orlandi, associate professor at Aarhus University, researching in cryptography, says Bitcoin emerged because there was a certain need for it. “Some people are fed up with the centralized banking system,” Orlandi indicates. Paying with Bitcoin makes moving money across borders easy, there are lower transaction fees than a bank would charge and it provides some degree of anonymity.


Claudio Orlandi

Claudio Orlandi


Owning a Bitcoin means that you know some secret ‘key’, which corresponds to a certain Bitcoin. This secret data is typically stored on your computer or your mobile phone. However, if your computer crashes or your mobile phone is lost, so is your Bitcoin. Orlandi already lost 200 Kroner worth of Bitcoins because his hard disk failed.


In Denmark, there are only three ATM’s where you can change cash into Bitcoins, all located in Copenhagen. Online you can buy Bitcoins through the Danish website Coinify. But what to purchase with it? Currently there aren’t too many places that accept Bitcoins. One option is Hungry.dk, an online service to order food – here you can pay with Bitcoins.


But Bitcoin still has a long way to go, and there is uncertainty if it will ever become one dominant payment method separate from the banking system. In December 2013, the European Banking Authority issued a warning against virtual currencies. The Danish Financial Supervisory Authority (FSA), part of the Ministry of Business and Growth followed suit. Under others, they list the high fluctuation of Bitcoin. Within the shortest period of time your Bitcoin can change from a great amount to no value at all. “Bitcoins are so volatile,” Orlandi emphasizes.


In the end the need for paper money persists – without paper money, what would children or people without a bank account do? Any kind of solution needs to take care of everybody. The existence of alternative payment methods, like Bitcoin, will probably have an impact on the use of money in the future. But right now Denmark is using electronic payments and paper money will keep existing by its side without a near end in sight.


Autorin: Anja Wölker

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