Swedish inquiry calls for state-run digital ID and low-risk bank accounts
A Swedish government inquiry into the payment system has called for the state to launch its own digital ID and a new type of basic, low-risk bank account to help the estimated 1m people with no, or limited, access to digital payments.
"Too many people are stuck outside the digital system," Anna Kinberg Batra, the former Moderate Party leader who led the inquiry said as she delivered the conclusions of her more than two-year inquiry on Friday. "Privately-run banks own central parts of the system and the government needs to get more involved."
In the report, it notes that Sweden is one of only four EU states, alongside Cyprus, Greece, and Romania, which lacks a state-issued digital ID.
Currently, BankID, which is issued by the major banks, dominates the e-ID landscape in Sweden, and even the main alternative, Freja e-ID, is owned by a private company.
The report calls on the government to either task a government agency to develop and run its own digital ID system, or to put out a tender for one which would be run by a private provider, but which meets government guarantees and requirements.
The new digital ID system, it said, it should make it possible for foreigners currently excluded from BankID, such as refugees, foreign students, and people working on short-term contracts, to identify themselves and use digital payment systems.
"For a state-run e-identification system to be able to provide an effective tool for financial inclusion it is important that there are no unnecessary obstacles for asylum seekers, foreign students, and guest workers, among others, to obtain a state-run e-identification."
The report also calls for action to prevent foreigners living in Sweden from being deprived of their bank accounts or prevented from getting them in the first place because of regulations put in place to prevent money laundering and terror financing.
It suggests pressuring banks in Sweden to offer so-called "low-risk accounts" with limited functions (such as, for example, limits on international payments).
"More people must be given access to bank accounts, through for example more effective surveillance and through banks using the possibilities in legislation to offer accounts with more limited functions (low risk accounts)," the report reads.
As well as access to digital payment services, the inquiry also looked at whether it was important for Sweden to continue to use physical cash and coins.
It concluded that it was important to continue to keep cash as part of the payments system, as otherwise Sweden would be vulnerable in a severe crisis or military attack.
The report also calls for government agencies and pharmacies and shops selling goods deemed essential to life, to be required under law to accept cash payments.
Finally, the report concludes that there is no need at present for the Riksbank to issue a so-called "digital krona", a state-backed digital coin similar to Bitcoin, but it encouraged the central bank to continue monitoring the situation.
"The Riksbank should continue to consider the issue," Kinberg Batra told TT. "We have a high confidence in our digital payments, a krona is worth a krona and we have a guarantee on bank deposits for if anything happens to the banks, and banks are also heavily supervised under a rigorous regulatory framework."
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"Too many people are stuck outside the digital system," Anna Kinberg Batra, the former Moderate Party leader who led the inquiry said as she delivered the conclusions of her more than two-year inquiry on Friday. "Privately-run banks own central parts of the system and the government needs to get more involved."
In the report, it notes that Sweden is one of only four EU states, alongside Cyprus, Greece, and Romania, which lacks a state-issued digital ID.
Currently, BankID, which is issued by the major banks, dominates the e-ID landscape in Sweden, and even the main alternative, Freja e-ID, is owned by a private company.
The report calls on the government to either task a government agency to develop and run its own digital ID system, or to put out a tender for one which would be run by a private provider, but which meets government guarantees and requirements.
The new digital ID system, it said, it should make it possible for foreigners currently excluded from BankID, such as refugees, foreign students, and people working on short-term contracts, to identify themselves and use digital payment systems.
"For a state-run e-identification system to be able to provide an effective tool for financial inclusion it is important that there are no unnecessary obstacles for asylum seekers, foreign students, and guest workers, among others, to obtain a state-run e-identification."
The report also calls for action to prevent foreigners living in Sweden from being deprived of their bank accounts or prevented from getting them in the first place because of regulations put in place to prevent money laundering and terror financing.
It suggests pressuring banks in Sweden to offer so-called "low-risk accounts" with limited functions (such as, for example, limits on international payments).
"More people must be given access to bank accounts, through for example more effective surveillance and through banks using the possibilities in legislation to offer accounts with more limited functions (low risk accounts)," the report reads.
As well as access to digital payment services, the inquiry also looked at whether it was important for Sweden to continue to use physical cash and coins.
It concluded that it was important to continue to keep cash as part of the payments system, as otherwise Sweden would be vulnerable in a severe crisis or military attack.
The report also calls for government agencies and pharmacies and shops selling goods deemed essential to life, to be required under law to accept cash payments.
Finally, the report concludes that there is no need at present for the Riksbank to issue a so-called "digital krona", a state-backed digital coin similar to Bitcoin, but it encouraged the central bank to continue monitoring the situation.
"The Riksbank should continue to consider the issue," Kinberg Batra told TT. "We have a high confidence in our digital payments, a krona is worth a krona and we have a guarantee on bank deposits for if anything happens to the banks, and banks are also heavily supervised under a rigorous regulatory framework."
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