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Withering Cash: Is Sweden Ahead of the Curve or Just Special?

Author

Listed:
  • Hanna Armelius

    (Confederation of Swedish Enterprise)

  • Carl Andreas Claussen

    (Sveriges Riksbank)

  • André Reslow

    (Sveriges Riksbank)

Abstract

Cash in circulation has increased in most countries but has fallen dramatically in Sweden. We explore the drivers behind this development using panel data consisting of 129 countries. In line with the previous literature, we find that GDP, demography, and the interest rate are key explanatory variables. A new finding is that lower corruption is associated with lower demand for cash in developed countries. Our empirical model performs relatively well in explaining the developments in most OECD countries. However, our model cannot explain the divergent Swedish development. We argue that a unique combination of events and policy measures have led to the decline of cash in Sweden.

Suggested Citation

  • Hanna Armelius & Carl Andreas Claussen & André Reslow, 2022. "Withering Cash: Is Sweden Ahead of the Curve or Just Special?," International Journal of Central Banking, International Journal of Central Banking, vol. 18(4), pages 1-52, October.
    • Handle: RePEc:ijc:ijcjou:y:2022:q:4:a:3
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    References listed on IDEAS

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    Cited by:

    1. Borgonovo, Emanuele & Caselli, Stefano & Cillo, Alessandra & Masciandaro, Donato & Rabitti, Giovanni, 2021. "Money, privacy, anonymity: What do experiments tell us?," Journal of Financial Stability, Elsevier, vol. 56(C).
    2. Solomon H. Tarlin, 2021. "The Future of Cash," Community Affairs Discussion Paper 21-03, Federal Reserve Bank of Philadelphia.

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    More about this item

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers

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