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The battle for cash

The prime minister and Norway's largest bank will remove coins and banknotes. The "Yes to Cash" organization is fighting. The topic is currently at the Storting.




(THIS ARTICLE IS MACHINE TRANSLATED by Google from Norwegian)

The "Yes to Cash" organization has 40 000 members on Facebook and has since 2016 worked to keep banknotes and coins as a valid form of payment. They are strongly critical of DNB and others who wish to remove such means of payment, and point out what a possible banking crisis will lead to if we can no longer withdraw our money.

Trond Bentestuen is DNB's Executive Vice President for Retail Markets in Norway. He believes that the fear that people will flow to the banks in Norway falls on their own unreasonableness, and rejects that the banks will remove the cash to protect themselves. He points out that DNB is considered one of the world's most solid banks.

The Norwegian bank, for its part, believes that it is in principle important that there is cash, in order to safeguard social security and preparedness. Before the summer, the Storting will decide on a proposal from the Center Party to preserve the cash.

Banking on the verge of bankruptcy. The Germans have been through several rounds of banking crises and inflation; almost a century ago, at one point they had to fill a wheelbarrow with banknotes in order to buy bread. Such events stand strong in the Germans' historical consciousness. At almost cyclical intervals, banks and financial
institutions in trouble and remain at risk of bankruptcy. Queues have been seen outside banks in Iceland, Greece and England during the financial crisis, where people would secure the savings because they feared that the banks would go over. The Germans' history of recurring banking crises also explains that many would rather be able to keep their money in the mattress than in the bank.

Hans Christian Færden is the founder of the interest group Yes to Cash. He believes cash is essential in financial crises: “There are several reasons why banks want to run out of cash. They are afraid that depositors will withdraw money that the bank no longer physically has. When you put money into the bank, the bank will normally lend 9 out of your 10 kroner. It is the bank that disposes of the money we deposit, in principle we do not do it ourselves. But we can choose to take them out – even though, under the suspicion of money laundering, terrorist financing and so on, it is becoming increasingly difficult to get your own money out of the bank. ” At the same time, there is every reason to believe that the banks are afraid: “If everyone comes at the same time and wants their money out, the bank goes bankrupt. The money is not there, after all. And in a debt-based financial crisis of epic dimensions, as the world is now heading into, it is only a matter of time before this scenario can come true. ”

Bank card movements are actively used by certain authoritarian regimes to map out and follow troubled oppositionists.

The privacy. Norwegians are among those who spend the least cash and most cards. Around four percent use cash as their primary form of payment. Norwegian banks, NHO Reiseliv, Fellesforbundet and parts of the Right are among those who believe that cash must go away. While Norwegians are the ones who use cards most often in the entire world, figures from the central bank show that there is still about NOK 50 billion in circulation as cash. But why is it so dangerous if the cash is lost?

Although Germany is similar to Norway, the Germans use cash a full four out of five times when they trade. The story explains why the Germans cling to their cash: If we look back to 1989, one of East Germany's largest employers was called Stasi. At that time, 200 Germans worked for what was one of the largest and worst surveillance organizations ever. Stasi had almost total control and insight into the smallest details of the East Germans' lives. Therefore, the privacy is extraordinarily well in the consciousness of many Germans.

Norwegians use debit cards daily. Each time we withdraw the credit card, we give you information about where we are, what we do and what we buy. This is information that banks can sell, among other things, for commercial operators to offer tailor-made services and advertising. In this way, information that reveals the banking customers' privacy is also used by completely different than the individual card user might wish. For example, bank card movements are actively used by certain authoritarian regimes to identify and follow troubled oppositionists.

Several types of money. Leif Veggum is Director of the Cash Payment Department at Norges Bank. Veggum emphasizes that there are two types of money in Norway today: Bank Money, which is an electronic claim in a private bank. Furthermore you have central bank money, which today are physical banknotes and coins. Ny Tid asks Norges Bank what people could do if trust in the banks disappeared, and the cash had been abolished:

When you put money into the bank, it will normally lend 9 out of your 10 kroner.

“The type of bank run is about people wanting to move their account money to physical central bank money because they feel it is safer. If trust in the electronic systems should fail, it is first and foremost about being able to dispose of own money. Then the audience will demand banknotes and coins, ”Veggum says. He believes that opportunities to choose central bank money will be in the consumer's interest:

“A model that includes cash underpins confidence in bank account money and the financial system. It provides competition and promotes efficiency. It is important to avoid monopoly situations. Cash also has useful properties, although used less than before – not least in the context of emergency preparedness. ” Norges Bank emphasizes that their role is primarily to facilitate a comprehensive and efficient payment system, not to promote a specific payment system.

But also our central bank Norges Bank is now investigating, like the Bank of England and Sveriges Riksbank, the possibility of new, digital central bank money in the future – as a supplement to or a substitute for cash, if they are phased out.

What if the power goes out? Yes to cash also believes that coins and banknotes are important if the power goes out, or if the electronic payment solutions should fail in some way. Norges Bank also believes this is an important argument for keeping the cash:

“In practice, cash is the preparedness solution should failure or fear of failure in electronic payment systems occur. We have seen, for example, that when bank strikes are notified, bank customers have taken out large amounts of cash to secure themselves. This illustrates that cash has an important contingency function, says Veggum of Norges Bank.

An argument used against cash is about the black economy and tax evasion. The use of cash in the black part of the construction industry is the reason why the Commonwealth wants only electronic money. To this, Ja says to the Hans Christian Færden of cash: «There are a total of NOK 2000 billion in circulation in Norway – of these only 50 billion (2,5 per cent) are cash. How can 2,5 percent be the problem? If all 50 billion were black money, which they are by no means, the problem would be small overall. We join in all good efforts against black labor! Apart from the attack on cash. A black digital economy is no more difficult than creating an account in your own name and then leaving it to someone else. The real criminals are long gone digital.»

Up in the Storting. Before the summer, the Storting will decide whether cash should be phased out or not. Erna Solberg and the management of Høyre earlier spoke out to phase out the cash, but were voted down at Høyre's national meeting. Ap probably wants to keep the cash, but has been open to phase them out over time. The Left and the Frp are to keep the cash for privacy reasons.

When Ny Tid contacted the Conservatives, they had not yet decided whether they would vote for the proposal – which comes from the Center Party – because they have not considered it in the parliamentary committee. Thus, it is still uncertain whether the initiative to secure the future of cash will receive support or not.

 Also read: Cash free – and totalitarian og Cash off
Øystein Windstad
Øystein Windstad
Former journalist at Ny Tid.

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