The Riksbank’s consultation response to the report of the Inquiry on Cash Handling

Date 13/02/2015

The Riksbank is positive on clearer regulations – but is not the right supervisory body

The Riksbank welcomes the report of the Inquiry on Cash Handling – Cash handling in Sweden (SOU 2014:61), and largely supports the proposals set forth. The Riksbank largely supports the proposal of the inquiry that the Riksbank be given overall responsibility for cash handling in Sweden, and in all material respects the cash processing business bill. However, the Riksbank rejects the proposal to appoint the Riksbank as the supervisory authority for cash processing companies.

Cash is important to a functioning society

Cash has an important function as a means of payment. In 2014 the average value of cash in circulation was approximately SEK 80 billion. It is hence a matter of substantial amounts. Cash handling that functions smoothly is of great importance. If the flow of cash does not work, this could lead to households and companies encountering difficulties, which could affect the payments system and lead to security risks.

 

The bankruptcy of Panaxia in 2015 clearly demonstrated the problems that can arise when a cash handling company suddenly disappears. It led to the Riksbank making a submission to the Riksdag proposing that regulations governing cash handling and participants therein be reviewed with the purpose of finding out whether the regulations suffice.

New overall responsibility for cash handling

Overall responsibility for cash handling in Sweden encompasses in part a task of monitoring cash handling, and in part taking measures when needs arise. The Riksbank shares the opinion of the inquiry that the Riksbank should be the authority with this responsibility. The Riksbank also concurs with the inquiry's interpretation that, already today, this responsibility can be considered to follow from the Riksbank's task to promote a safe and efficient payments system, and is of the opinion that it should also be clarified in the Sveriges Riksbank Act. It is positive that it will be clear that the Riksbank shall monitor cash handling on an ongoing basis and more systematically than it has done so far. In the consultation response, the Riksbank's possibilities of taking measures in the event of problems in cash handling are discussed. The Riksbank also emphasises that problems in cash handling must be assessed based on the effects on the payments system as a whole.

The cash processing business act is positive

The Riksbank supports the inquiry's proposal that cash processing operations should be subject to authorisation and supervision. However, in the Riksbank's opinion, the bill should be modified in some respects. For example, it should make clearer which companies are encompassed by the scope of the act. There should also be requirements regarding both a certain legal form of business entity and capital buffers for such operations.

The Riksbank is not the most appropriate supervisory authority for cash processing companies

However, the Riksbank rejects the inquiry's proposal to appoint the Riksbank as the supervisory authority for cash processing companies and finds that Finansinspektionen is more suitable. The Riksbank finds that its own involvement in cash handling is a strong reason for not giving the Riskbank supervisory responsibility for cash handling. It can also be questioned whether it is appropriate to combine a supervisory role with the overall responsibility for cash handling which the Riksbank is proposed to have. Finansinspektionen is the authority in Sweden currently with the expertise and experience in granting authorisations and supervising financial companies that conduct cash handling. The Riksbank is thus of the opinion that it would be most effective to appoint Finansinspektionen as supervisory authority for cash processing companies.

 

Read the entire consultation response: Consultation response regarding the Inquiry on Cash Handling's report, Cash handing in Sweden (SOU 2014:61)