Archive for March 14th, 2018

Swedish Opposition to Cash-Free Economy Gains Momentum

March 14, 2018

Interesting bit by Amelia Lucas:

On the front door of a bank only a block away from Stockholm’s Centralstation is a sign that reads “Inga kontanter” with an English translation below: No cash available. Walk a few more blocks under the gray winter sky, and see signs hanging on the front doors of coffee shops that say “Endast kreditkort” or “Vi är en kontanantfri coffee shop” — “only credit cards” and “we are a cash-free coffee shop,” respectively. Amble through the gift shops of the ABBA Museum or Fotograsfika, a popular contemporary photography center, and signs near the register alert customers that they, too, do not accept cash.

Less than 400 years after it became the first European country to introduce banknotes, Sweden is on track to become the world’s first cashless economy.

And while proponents of this no-bill world believe it will lead to a reduction in crime and save the government money, others are worried. Defenders of rural areas, small businesses, and pensioners say that some people are being left behind, while other critics worry about the potential security risks.

Data from the Riksbank, Sweden’s central bank, also suggests that anger toward the decline in cash has increased. In 2016, 31 percent of survey respondents expressed negativity toward the decline, compared to 24 percent in 2014. The increase in negativity does not mean that respondents lack access to alternative means of payment; 97 percent of respondents in 2016 said that they had access to a bank card.

“It’s not a problem for me,” said Jan Andersson, chairman of PRO Skåne, the southernmost branch of Sweden’s largest pensioners organization. “I have cards. I also use Swish. And I have Internet to pay my bills and so on. But a lot of people who are 75, 80 years old–we live longer and longer–especially among them, they are left behind.”

 

RBI discontinues Letters of Undertaking (LoUs) and Letters of Comfort (LoCs) for trade credits…

March 14, 2018

Given all the banking crises talk, it was odd to see this working paper from RBI research team titled – “Non-Linear, Asymmetric and Time-Varying Exchange Rate Pass-Through: Recent Evidence from India”.  Research should continue but it should be on relevant issues. Indian central bank has remained alarmingly silent all this while no matter the scale and size of the issue.

And then there was this notification from the central bank asking banks to discontinue LoUs/LoCs with immediate effect. But then is the problem with LoU/LoC as an instrument for trade finance or with banking culture in general?

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