Impact of Cashless Systems on the Economies of Sweden and Singapore

This report presents a comprehensive analysis of the transition to cashless systems in Sweden and Singapore. It explores the economic impacts, government policies, and the role of central banks (specifically Riksbank in Sweden) in fostering cashless societies. The report delves into the benefits of cashless transactions, such as reduced crime and improved efficiency, while also addressing the challenges, including privacy concerns, potential for hacking, technological dependencies, and inequality. A comparative analysis is conducted, highlighting the strategies employed by both countries and their effects on their respective economies. The research utilizes qualitative data and secondary sources to evaluate the current state and future prospects of cashless systems, concluding with suggestions for further research in this evolving field. The report covers literature review, importance of cashless transactions, monetary policy, and methodology used for the research.

Running head: BUSINESS RESEARCH METHOD
Business Research Method
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Author’s Note

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Abstract
The research proposal is being conducted considering the economies of Sweden and Singapore
and how the economies would react if 95% level of cashless system is established in both the
economies. The research considers qualitative data and utilizes secondary sources for the
purpose of collection of data. The research proposal considers the role of the government and
also the monetary policy which is formulated by the central bank of the respective nations and
how the same have impact on establishing a cashless society. In addition to this, the literature
review section also shows the merits and demerits which are associated with the cashless society
in an economy. The assessment goes in details relating to the monetary policies which are
formulated by the government of Sweden and Singapore. The assessment concludes with
discussion relating to what further research can be done in the respect of developing a cashless
society.

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Table of Contents
Introduction......................................................................................................................................3
Literature Review............................................................................................................................4
Cashless Society in Sweden.........................................................................................................8
Cashless Society in Singapore...................................................................................................11
Importance of Cashless Transactions........................................................................................15
Monetary Policy.........................................................................................................................17
Literature Gap................................................................................................................................21
Results of the Research..............................................................................................................21
Methodology..................................................................................................................................24
Conclusion.....................................................................................................................................25
Reference.......................................................................................................................................26

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Introduction
The main purpose of this assessment is to analyze the economies of Sweden and
Singapore and analyze how adopting cashless system in such counties would affect the country.
The research proposal considers how implementation of cash less system in both the countries
can bring about a change in the economy as a whole. There have been significant changes in the
working of the economy as repetitive focus is provided on establishing a cashless system. The
main purpose of a cashless system is to ensure that the transaction is undertaken in day to day
activities and businesses in a economy would be taken care of without the use of actual currency.
The change in technology allows economies to develop digital currency which can be used as
freely as real currency for trade and commerce. The operation of becoming a cashless economy
is being followed by many economies but it can be clearly identified that the world is decades
away from achieving a fully operational cashless society. Still some of the countries have
developed more in this respect than other economies and are already reaping the benefits which
are associated with a cashless society.
In today’s world, the role of technology has touched every field and has brought about
changes which has positively impacted the filed. In a similar way, the cashless system provides a
scope to economies to move from their printed notes and coins structure of currency to a better
currency system. Some of the countries are driving effectively towards this goal but the same is
not completely possible before a decade (Bátiz-Lazo, Haigh & Stearns, 2014). Some of the
economies of the world however such as Sweden and Singapore have made great strides towards
the fully operational cashless economy. Sweden for instance has abandoned cash system in favor
of an electronic currency system. The central bank of Sweden, Riksbank has played a major role
in ensuring that such a transition takes place (Batiz-Lazo & Efthymiou, 2016). Another example

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can be given of restaurants and retail business operating in the US are experimenting with the
new cashless system.
The advantages which are associated with the cashless system are enormous and the same
is applicable to any form of business. The cashless is responsible for better control for the
government of the country over the financial system of the country. Another major positive
factor which can be identified is the cashless system would stop corruption practices in an
economy. The level of efficiency also increases due to such a system but there are certain
disadvantages which can be easily be identified in the cashless system.
The assessment considers the economies of two countries Sweden and Singapore which
have taken considerable steps towards achieving an economy which has cashless system. The
assessment also shows importance of cashless system and the benefits which are associated with
the implementation of cashless system in an economy. The assessment would be including a
comparative analysis as to the policies which are implemented in Sweden and Singapore and
how they are same effect both the economies as a whole.
Literature Review
The cashless society is an economy is a society which uses less of paper currency or cash
and utilize more of electronic or other methods of making payments. Some of the methods which
can be used for making payments under cashless system are through debit cards, credit cards,
electronic transfer and other methods as well. The future generation is very much interested in
the concept of cashless payments and the concept not only holds significance from a personal
point of view but also from a financial point of view considering the whole of nation.

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Cashless society promotes the use of cashless methods for any payments such as plastic
cards and the same can be used for maintaining track of records for payments (Markendahl,
Apanasevic & Arvidsson, 2013). The concept of cashless society holds lot of potential for future
and even some of the critics of mainstream financial system and currency issued by the
government are in favor of such cashless transactions. There are certain benefits which are
associated with a cashless society and the same is shown below in details:
 Reduction in Crime: The cash which is used as currency in present time are vulnerable to
theft and can be easily be stolen irrespective the amount is a small amount of a large
amount. In addition to this, there are other crimes as well which are associated with cash
transactions such as drug money, extortion (Berentsen & Schär, 2016). These crimes can
easily be contained following the cashless system of currency flow in an economy.
 Paper Trials: The cash transactions in an economy and in case of certain companies are
difficult to follow and keep a track of. The paper trails can be easily be maintained in
case of cashless system of making payments (Iyer, 2017). The cashless system helps in
ensuring that the financial crimes in an economy dries up. The paper trail in case of
cashless transactions are very difficult to hide and therefore tax evasion becomes
impossible. This is beneficial to the society as a whole and also to the government as they
would have more revenue in their hands. In addition to this, money laundering activities
becomes extremely difficult in case of cashless system.
 Cash Management: The process of printing notes and also coins is a costly process and
the government is responsible for maintaining the cash and also storing the same. From
the view point of companies, the business also needs to manage the cash in order to
finance the day to day activities of the business and deposit some part of the cash if too

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much funds are accumulated in the hands. The management and transfer of money
through cashless system is more efficient and the same can be recognized as the most
safest method of dealing with cash in a business or an economy.
 International Payments: When a trade is being conducted with a foreign country, it is
natural domestic currency needs to be converted to foreign currency in case of normal
system. With the help of cashless system of payments, the whole process becomes a lot
easier (Siyanbola, 2013). In addition to this, foreign travel becomes a lot easy with the
help of cashless system. Nowadays most of such cashless payments are done effectively
with the help of mobile devices itself.
There are certain demerits which are also associated with the cashless system and the same
are listed below in details:
 Privacy: The cashless payments which are mostly electronic in nature and therefore the
same means there will be a lack of privacy in order to handle the data. There are various
organizations set up for the purpose of protecting the customers data and ensuring that a
level of privacy is maintained. However, the same is not the case, it cannot be predicted
how the payment information can come up and in cashless system customer data is
always maintained. Therefore, the privacy cannot always be maintained in a cashless
system for the customers.
 Hacking: As the world is moving towards digitalization in all operations, the incidence of
cybercrime is also on the rise. The incidence of hacking has affected the digital payment
method. These hacking incidences are similar ton theft and robbers who can effectively
drain cash through hacking activities from clients (Olusola et al., 2013). In a cashless
society, the major threat which is faced is from hacking as computers can be used for

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robbing. The federal law in most of the countries protect from such breaches but the same
is still very much inconvenient. Therefore, the same can be considered as a major
disadvantage which is associated with the cashless system.
 Technology Problems: In a cashless system of making payments, the payment process is
directly related to technological level in the economy. The technology which is used by
most of the countries are mostly affected by glitches, outages, and innocent mistakes
which also affect the payment system. Another major problem is that the processing time
for the transactions in online system depends on the server and net facilities which can
also cause a situation of delay in payments (Thomas, Jain & Angus, 2013). The
merchants would not have any mode of receiving payments if the system malfunctions.
Therefore, in simple words, the cashless system is heavily depended on technology which
is backing the cashless payment system.
 Inequality: The system of cashless payment would be tough for the people who are poor
and do not utilizes banking facilities. The devices which are used for such cashless
payments are expensive and therefore are no accessible by all the people. Therefore, it
can be states that the new cashless society system would only enhance the inequality in
the economy. An example can be give of the government of UK which is trying to donate
the people with devices through charities but the same is still a long way to go
considering the development which is taking place in the economy.
The above discussion effectively shows the demerits and merits which are associated with
the cashless system. Some of the method of cashless system which is adopted already are mobile
apps and credit cards for making payments.

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Cashless Society in Sweden
The cashless society has a lot of potential in becoming a system in which payment for
transactions takes place in future. The central bank of Sweden, Riksbank has undertaken
effective policies for reaching the situation in which Sweden is current placed. The economy of
Sweden has greatly developed over the years and the same has overtaken the United States when
it comes to setting up a society of cashless transactions (Bátiz-Lazo, Karlsson & Thodenius,
2014). Some of the policies which have been framed by the government of Sweden is aimed
towards achieving a total cashless society in the country. The role of the government in this
aspect has been significant and the society has also responded positively towards the
development which are being made in the financial structure of the country.
As per many researchers, Sweden can be the first country who can reach the status of
being a cashless economy in the world. The country in current era itself is considered to be the
most cashless economy in the world (Fung, 2015). The residents of Sweden has more access to
cards for making any sort of payments rather than use cash for such a purpose. This is stated in
the recent report which was formulated by the central bank of Sweden, Riksbank. In addition to
this, the report further suggest that the economy is already at 85% level of cashless society as
most of the transactions which are undertaken in the economy is through online banking or card
payments (Nordic.businessinsider.com., 2018). In addition to this, there is further evidence as the
circulation of notes and coins as a percentage of gross domestic product is falling continuously
year by year. This is a substantial evidence that the economy is moving towards a totals cashless
society system and it is estimated that Sweden would reach such a status by 2023 considering all
the developments takes place in the same rate (Browne, 2018).

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On the basis of data which is available for 2016. The residents of Sweden made around
461.5 digital transactions which corresponds to a 13% increase in the estimate of digital
payments in just a period of one year as per the annual world payment report. In a similar way,
the report also showed that the number of cashless payment in US increased by only 5.2%
considering the same time period (Jakobsson, 2017). This shows that Sweden is well ahead of
US at the moment and is also anticipated to be the first nation to reach a total cashless situation
in the world (Arvidsson, Hedman & Segendorf, 2016). The main fact which has resulted in such
growth in the digital payments in Sweden is mainly due to the role which is played by the
country in supporting the residents and facilitating a cashless society (Heller, 2016). This is
evident as the financial structure encourages people to use online payment apps such as Swish
which is estimated to be used by around 6.33 million people in Sweden. In addition to this, the
banks which operates in the country are also cooperative of the new system of digital payments
and have launched their own respective apps to be supportive of the system.
The indicators that the economy of Sweden is moving towards being a cashless society
are listed below in details:
 The usage of cash is dropping significantly and most of the residents are using online
banking system or switching to some app. This indicates that the economy would soon
become a cashless economy.
 The estimates which is available from the reports of the central bank is that, the country
could abandon paper money within a period of 5 years and the same is also confirmed by
the experts at the Royal Institute of Technology in Stockholm.
 In addition to this, it is also estimated that only 13% of the total money transactions are
taking place in cash today.

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The above estimates have made it clear that the economy is likely to achieve a situation of
cashless economy. On the contrary, the situation around the world is not so great as estimate
suggest that there are still around 500 billion currency notes in circulations. Therefore, it can be
easily said that the world needs a lot of time to achieve a full cashless situation. The development
in the economy of Sweden is rapid in nature and the use of coins and currency has fallen by
around 30% between the year 2012 and 2014. The government is of the opinion that going
cashless has certain amount of benefits for the society. The abandonment of notes not only is
convenient for the residents of the country but also helps the government in keeping a track of all
the money and therefore it is very difficult to hide cash or even evade taxes from the government
(Lucassen & Zuijderduijn, 2014). In addition to this, the system also reduces incidence of
robbery in the country therefore creating a safe society.
The main reasons which can be identified for the development of the country for such
technological aspect is mainly due to active governmental support (Kallin, Rydbeck & Wictorin,
2017). The demand for cash in the country is continuously falling and the government has
effectively restricted the supply of cash in the economy which has resulted in the people relying
in more on digital payment system (Chen, 2015). The challenge for the government of Sweden is
to appropriately formulate a monetary policy which can support cashless society program of the
country (Epstein, 2017). The country has also witness significant development in terms of
technology which can support such cashless system. The launching of several payment apps in
the country has driven the people of the country to make a switch from cash payment system to
digital payment system (Feuerriegel & Neumann, 2017). An estimate suggest that only elder
people and refugees in Sweden utilizes cash payment system and the same is also estimated to
stop within a decade time. The country has also developed a virtual currency which is called

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ekrona. The project is considered to make the cashless situation in the economy more efficient
and thereby also make the system universal. The project is at the second phase of its life and the
same is supported by the technological advancement in the economy. Even the retail shops and
restaurant refuse to take cash as very few people use the cash system and therefore it is
efficiently followed in the economy. Therefore, one of the results which can be identified from
the application of cashless system is that the government has full control over the operations in
the economy and the financial structure is made more efficient in nature.
Cashless Society in Singapore
The cashless society development in Asian continent has been led forward by China and
Singapore. The cashless society development in the economy is considered to be an important
aspect for overall development of a financial structure in an economy. The government of
Singapore is striding towards implementation of cashless system in the society and for such a
purpose the government of Singapore is encouraging payments through e-wallet system or use of
some mobile application (Khong & Escobar, 2017). The government of Singapore has adopting
every policy to nudge the population for embracing mobile payments. The government of
Singapore us adopting research and development practices for advancing the technological level
in the economy and thereby also compete with the other developed countries from the view point
of financial structure.
The level of competition in Singapore banking sector is heating up fast and the largest
bank in DBS group holdings is supporting the aspect of cashless system in the society. The cash
withdrawals in Singapore is falling by more than $300 million a year and the society is actively
trying to implement digital payment apps which are increasing by percentage wise (Jain & Jain,
2017). The government is also trying to bring about new apps which can effectively facilitate