According to the Bank of Finland, Cash May No Longer Be Needed after 15 Years

January 8, 2015         By: Michael Cheng

Financial experts from the Bank of Finland suggested that banknotes could be phased out by 2030. Technological advancements surrounding mobile payments and the need for convenient banking services are largely responsible for this feasible prediction.

Kari Takala, senior advisor at the Bank of Finland’s Currency Department, said, “Many see cash as a backup system. It’s quick and convenient to use. In the future we’ll have to see how quickly mobile payment methods replace cash.”

For businesses and competitive merchants, cash comes with several problems. Holding large bundles of hard notes takes up space. The more an establishment holds, the more secure the managing facility has to be, which can lead to serious upkeep and accountability issues.

When it comes to creating money for circulation, manufacturing new notes has proven to be a costly and painstaking process.

Such issues have led countries like Finland to allow the use of euro for electronic transactions. The central bank takes a very practical and mildly conservative stand on alternative payment options. The financial institution does not favor digital payments over cash and vice versa.

“The Bank of Finland and the whole eurozone have a neutral approach to the situation. People decide for themselves what kind of payment methods they want to use in various situations. The change will be driven by market forces when the time comes,” explained Takala.

The leading adviser admitted that Finland still has a long way to go in the adoption process. Takla highlighted that for now, new payment methods are only being used for light and miscellaneous expenses.

In other countries such as Mexico and India, where the majority of the population are underbanked, payments through handheld devices are being used to minimize risks associated with handling cash.