This is a simple discussion, please do not copy past from other website, thanks.

Question

This is a simple discussion, please do not copy past from other website, thanks.

Discussion Sweden: First Cashless Society?

http://www.businessinsider.com/sweden-cashless-society-negative-interest-rates-2015-10

This current even article explains the way that Sweden and other possible countries are moving away from physical cash. What kind effect do you think this move towards a cashless society will have on the economy and also the culture? Please also comment on at least one other student's post.

Explanation / Answer

Sweden is having following two economic trends in their country at the same time:

Swedish Governments wants people to spend more through cashless means(cards, online banking etc) to boost aggregate demand in economy. It is discoraging use of cash to achieve following objectives:

To save money and time: Cost of handling and accounting cash is high.

Less cash leads to decrease crime: US is a good example wherein crime rate came down by 10% when government promoted digital transactions. Issue of fake currency also gets resolved.

Notes printing and coin minting costs are avoided.

Digital transactions lead to generate more economic data that helps Economists to adopt better policies.

Boosts Economy: It helps economy by encouraging people to spend more. Eg. Since 2011 USA Economy got an impetus of 0.1 % in GDP through cashless means.

However government has to be wary of folllowing points: Cyber frauds, hacking, credit card overdues etc.

Effect on culture:

A study has proved that people spend more when they spend through cards as comapred to cash and hence tendency of people to spend more would increase.

Luxury items would be demanded more. Artists, performers will have good days and professions like agriculture would be considered low profile.

Eating out, party culture would be encouraged and people will be spending more than earning which will lead to financial stress and psychological unrest.

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