Denmark stops printing bank notes, minting coins

By Richard Giedroyc

Denmark is one step closer to becoming the first modern cashless society. The Nationalbanken or Danish central bank announced on Oct. 21 that it will stop printing bank notes and likely issuing coins by the end of 2016.

The decision is partially a money saving move, but is also partially based on a domestic economy that has increasingly in recent years moved from using cash to using various forms of electronic transfers for financial transactions.

A bank press release states, “Although the amount of cash circulating in Denmark continues to be high, society’s demand for new bank notes and coins has been falling for years, and Nationalbanken has no expectations that the trend will be reverse.”

Elsewhere is the press release it reads, “The reasons are that notes are used less in transactions, the notes are being circulated better in society, and the quality of the bank notes series is better, so the notes last long.”

The press release continues, “This means, all things considered, that note and coin production by the Nationalbanken is neither now or in the future appropriate.” The central bank’s function was carefully defended through the statement: “Nationalbanken will continue to be the issuing authority for bank notes and coins and will maintain its expertise in the area of notes and coins. It is only the internal production of the notes and coins that will henceforth be done by external suppliers.”

The central bank indicated it projects saving 100 million kroner or about $17.2 million U.S. through 2020 through this action.

The Oct. 21 issue of The Copenhagen Post newspaper commented, “Other payment methods have taken over to such an extent that producing notes has become a loss leader.”

On July 15 The Copenhagen Post published an article in which it reads, “In the past 30 years the number of Dankort transactions in Danish stores has been on a steady rise, according to figures released from the national bank.”

The article continues, “In 2012 people paid with their Dankorts nearly a billion times, compared to 400 million times in 2000, while checks and cash payments are getting rarer. In addition, mobile payments are getting more and more popular.”

Dankort is Denmark’s national debit card. It can function as a credit card as well when used abroad when combined with a Visa card.

Nykredit economist Johan Juul-Jensen has predicted that Denmark will eventually become a cash-free zone. In July he was quoted saying, “I don’t think it’s right around the corner,” adding, “It’s the direction we are heading—but not in the short run.” These comments, of course, were made prior to the central bank’s recent decision to suspend producing coins and bank notes domestically.

The Danish government is looking ahead. The government did shelve a proposal earlier this year that would have authorized a three-year test of cash-free stores to see if this might lower the incidence of robberies. Danish tax minister Thor M. Pedersen has been urging people to use Dankort cards or bank transfers rather than cash since 2011.

According to the Nov. 22, 2011, The Copenhagen Post, “The government is suggesting…that Danes limit their cash payments to a maximum of 10,000 kroner [about $1,700 US]. While paying more than 10,000 kroner in cash will remain legal, adhering to the limit ensures that the buyer won’t be culpable in a major case of tax evasion.”

About the same time a Ramba Jyllands-Posten survey indicated only 44 percent of Danish citizens supported the idea of this cap on the value of cash transactions. Denmark’s 25 percent Value Added Tax is blamed for much of the black market activity transacted in cash about which the government tax agency is complaining.

A 2011 Rockwool Foundation study identified car dealers, car mechanics, farmers, fishermen, and tradesmen as most likely to use cash transactions in an effort to avoid the VAT. The same study indicated wealthier families are more likely to pay for unreported work in cash for the same reason.

• Kick-start your coin collection with the Fundamentals of Coin Collecting set of essential resources and tools.

• Strike it rich with this U.S. coins value pack.

• Build an impressive collection with Coin Collecting 101.