EDITORIAL
Even in the age of electronic money transfers, it may still be difficult to imagine a market system functioning without circulation of paper currencies or metal coins. But Scandinavian nations are fast heading towards such a scenario with Denmark taking the lead and showing the way forward to the world.
Denmark is poised to become the world’s first cashless society six months hence — from January, 2016. This, undoubtedly, is a groundbreaking move, heralding a totally new system of market economy. A confident Central Bank of Denmark has also taken a decision, in principle, to stop printing paper money or bank notes and metal coins after a year or so.
Before we go further into this topic, let us flash our memory back to a very interesting sort of a bank robbery attempt that took place at Stockholm in 2013. Without realising that most of the banks in Sweden were engaged in electronic transfer of money with no stash of cash kept within its premises, a robber entered inside a Swedish bank to rob it. Much to his dismay, he found no cash worth carrying. The robber had every reason to blame the cashless bank transactions.
The people in Nordic nations, on the other hand, have every reason to support and opt for the system. While Denmark already announced plans to introduce the system from next year, Sweden, Norway, Finland and Iceland are also developing ways and means to switch over to this unique method at the earliest. All major Swedish banks currently operate cashless branches. It is projected that, by 2030, all the banking branches in Sweden would switch over to cashless mode. Denmark too is going to make branches of its major banks cashless as all operations will be switched over to electronic money transfer mode within next one year.
In an interesting development, the Danish government is proposing to scrap the centuries-old obligation of buyers to give cash to the sellers for the purchases they make. So much so, soon Danes will be going to market places only with their smartphones to make payments, leaving their wallets at home. Through the wireless communication payments mode, buyers of commodities and services can make payments to sellers through their smartphones. IT and financial services companies in Denmark are working on ways to totally replace physical paper currencies and metallic money as a means of payment by introducing the revolutionary wireless communication transactions through smartphones.
Moves are also afoot in Denmark to link those wireless payments to biometric signatures to prevent customers’ bank account from being hacked and avoid chances of fraud. IT companies, including IBM, are devising systems to forestall identity theft too. A part of Denmark’s bid to further accelerate economic growth, this cashless method will undoubtedly reduce overhead expenses of retailers and minimise security risks. The problem of managing change at the cash counter too is eliminated. As a large proportion of people in Denmark is already using electronic money, the nation is likely to switch over to the new system without any problem.
This decision to have a cashless market system in Denmark comes after a period of informal trial — a time when the Danes have got somewhat used to making their payments through smartphones or MobilePay – an official Danske Bank appliance. The system links the mobile phone of the customer to the seller’s user phone. To stop any sort of fraud, the Danske Bank of Denmark has decided to link the MobilePay account to the national insurance number of the buyers.
This novel system would eradicate the problem of upkeeping cash, giving small change to customers and maintaining a ledger of daily sale proceeds. By the click of the button, a shopkeeper can get the printout of daily transaction or see it on the screen of the smartphone.
More importantly, the system will do away with the menace of fake currency that circulates in almost all countries. It would be money saving for the government, as the need to mint currencies and coins are automatically minimised. The Danish Chamber of Commerce said the cashless system will be far more cheaper and easier for companies than the currency exchange system.
India, in particular, has reason to be taking a keen interest in the cashless society concept in view of the vast spread of fake currency being pumped into the country from suspected ISI agents. Union finance minister Arun Jaitley has stated recently that the government is making a serious effort to encourage electronic cash transactions and reduce currency deals. The tiny Scandinavian countries show the way, but for a nation the size of India, what is possible is a gradual progress in this respect.
