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Cashless Swedes still sitting on old kronor worth billions

Old Swedish kronor worth 7.7 billion ($906 million) are still out there in Swedes' piggy banks, wallets and mattresses, according to the country's central bank, despite them having been declared invalid.

Published: 6 July 2017 08:03 CEST
Updated: 6 July 2017 13:06 CEST

Cashless Swedes still sitting on old kronor worth billions

An old 100-kronor note and a new 50-kronor note. Photo: Adam Wrafter/SvD/TT

The old one-krona, two-kronor and five-kronor coins, as well as the old 100 kronor and 500 kronor banknotes, ceased to be legal currency on June 30th this year, after being replaced by new designs.

It followed the old 20, 50 and 1,000 kronor bills also being replaced by new banknotes a year ago.

In an effort to get people to hand in their old cash, the Riksbank, Sweden's central bank, launched a campaign last year featuring “Wanted” posters on billboards, in newspapers and in digital channels.

But according to its latest estimate, 5.9 billion kronor's worth of old notes and 1.8 billion kronor's worth of old coins are still missing.

Since October 2015, when the money changeover began, 90 percent of the old banknotes have been handed in, but only 35 percent of the coins, according to the Riksbank.

It is still possible to hand in the old one, two and five kronor coins to a bank until August 31st 2017. The deadline for handing in the 100 and 500 bills is June 30th 2018.

Even if you miss those deadlines, you can still send the notes to the Riksbank, but it will then cost 100 kronor to get them deposited.

Exactly what Swedes are doing with all the missing cash is not clear, but there's a good chance that much of it is hiding in drawers in the famously cash-averse country.

Sweden is one of the countries that has come furthest towards becoming a cash-free society, with cash transactions accounting for just two percent of the value all payments.

Research commissioned last year by the credit firm company Visa suggests that Swedes are not only using payment cards more often than people in most other nations, they are also using them for smaller amounts of money.

According to Visa, the average card purchase in Sweden amounts to 301 kronor, while the European average is 459 kronor. People living in Sweden also use their cards more regularly than those living in all other countries except Finland, the study suggests.

How to protect your Swedish savings when the stock market tumbles

Stock market volatility can be unsettling, especially when it hits close to home.

On Monday, the Stockholm stock exchange mirrored global market turmoil, with the OMXS index dropping 4.8 percent in morning trading. By 11 am, there was a slight recovery, but the index remained 2.6 percent down.

READ MORE: Stockholm stock exchange opens in the red amid global market jitters

Big names in Swedish industry weren’t spared: Boliden, a major mining company, dropped 3 percent, defence giant Saab fell 1.5 percent, and engineering firm Sandvik declined by 2.6 percent. In the banking sector, SEB took a 2.4 percent hit, while Swedbank dropped 3.6 percent.

This turbulence in the Swedish market came after significant drops in Japan’s Nikkei 225 index, which experienced its most significant one-day fall since the 1987 Black Monday Crash, and similar declines in markets across South Korea, Frankfurt, London, and anticipated losses on Wall Street.

In these uncertain times, many Swedish consumers with money invested in the market wonder whether they should do something to safeguard their savings.

Avoid impulsive decisions, expert warns

Stock market volatility can raise concerns about the safety of your savings, but according to SEB household economist Américo Fernández, there’s no need to panic.

“Should they be worried? I mean, no. I would say that this is how the stock market works: there’s a lot of uncertainty and risk connected,” he told The Local.

“When you have savings on the global stock exchanges, this will happen, especially when we’ve had at least six months of really, really good returns – maybe even too good. Then, this is a little bit expected.

“But of course, it’s always dramatic when we have such developments in the stock market in just one or two days.”

Slow and steady wins the (investment) race

For those wondering how to protect themselves against such crashes, Fernández emphasised a consistent and steady approach to investing.

“The most common thing, the best strategy for the broad masses, is to save on a monthly basis. And this is what many Swedes do; our surveys show that 9 out of 10 Swedes save on the stock market every month. This is precisely what you should do: invest in a mutual fund, which is quite common in Sweden,” he said.

“In circumstances such as these, you buy more at a lower price, instead of timing the stock market, which is almost impossible, continue your monthly investments through mutual funds. That’s a good way of diversifying your portfolio.”

READ ALSO: Will the krona’s decline stop Riksbank from cutting rates?

Ignore the alarmist headlines

The SEB household economist also advised against reacting hastily to alarming headlines.

“Another thing that households should be aware of is that when you see alarming headlines, you should sit and calmly ride the wave out.

“It’s understandable that a lot of people are affected by herd mentality when we have these negative headlines. Everyone, but especially households with tiny savings, acts and sells, and then they buy again when the headlines are positive, when the stock exchange is at high levels…

“That is the opposite of what you should do. Try to neglect these things and be cool in these circumstances, even though it seems bad and hurts your wallet. However, if it hurts your wallet too much, that might be a signal that you have too much money in the stock market (laughs), which can be common for younger investors. Although they have had it pretty good recently,” he noted.

This advice is not only applicable to Sweden but also relevant across Scandinavia, according to Fernández.

“I think it’s applicable. Across Scandinavia, all Nordic countries save a lot of money on the stock exchange, partially because the pension system isn’t fully funded by the government,” he said.

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