the same way as the meter system for measuring distances. secondly, money must be able to function as ( 2 ) a store of value, with a relatively stable value over time. this is needed because saving is a means of postponing consumption until a later date. thirdly, it shall function as ( 3 ) a means of payment, that is, it shall transfer a value to the recipient, who can then use it to pay someone else. this requires that we have easy access to money when we need it and that the instruments we use as money can be comfortably transported with us. it is here that technological advances entail changes. the money we use must have the general public's confidence there is a further element that is essential for money and the entire monetary system to function : the general public's confidence. all those who have entered into agreements entailing money should rely on them holding. the money must retain its value over time and be accepted by everyone. having said this, it is easy to understand why central banks were created once upon a time and were given the central role in the monetary system that they have now. the task of the central banks was to provide the general public with money in the form of banknotes and coins that did not entail any credit risk and that inspired confidence – what was known as central bank money. this task included price stability, that is, that the central banks guaranteed the long - term value of the money. to begin with, the central banks had this task parallel to commercial banks, which issued their own banknotes. then money from different issuers could have different values, depending on how much money had been issued, and exchange rates could arise between different types of money. eventually, the central banks were also given the responsibility for creating a uniform standard. in sweden, this took place in 1904, when the riksbank was given a monopoly on issuing banknotes and commercial banks stopped issuing them. in time, the banks were able to develop payment channels that enabled the general public to use their account balances as money. in the beginning this involved cheques and gradually card payments were developed. in sweden, there were also state initiatives to make payments more effective. in the 1920s, the postgirot system was created, which enable efficient transfers of money to and from accounts in the system. just over 20 years later, the banks emulated this and created their own joint system, bankgirot. all of these systems are

the riksbank ’ s survey of the swedish people ’ s payment habits, around 40 per cent of payments in the retail trade were made in cash in 2010. this figure has now declined to 15 per cent. unique reduction in demand for cash note. sek billion ( annual average ). cash in circulation as a percentage of gdp. sources : statistics sweden and the riksbank. it is a well - known fact that the payments market is characterised by network effects. put simply, the more people who use or accept an instrument of payment, the greater benefit each consumer or merchant has from using or accepting it. few people would want to have a card if there were not sufficient traders who accepted card payments. traders on their part would not want to accept card payments if there were not enough consumers willing to pay with cards. in other words, a critical mass of users is needed for a payment instrument to be generally accepted and successful. when fewer and fewer people are using a payment instrument, one gradually reaches a point where it is no longer profitable to continue using the instrument. then it will disappear from the market, which was the case with cheques in sweden in the 1990s. given that the use of cash is declining rapidly, there is reason to wonder whether we are now reaching the same point with regard to cash. ac - 1 on 31 october 2017 there was sek 45. 2 billion in valid banknotes in circulation, with the 1, 000 - krona banknote accounting of sek3. 5 billion of this. the value of the valid coins was sek 2. 7 billion, including commemorative coins ( sek 34 million ). 2 cording to current research, half of swedish traders believe they will stop accepting cash by 2025. in other words, for sweden the cashless society is no longer just a hypothetical situation in the distant future. digitalisation driving development the rapid decline in the use of cash in sweden is part of a broad digitalisation trend that affects society as a whole. technological advances have given us, for instance, new more efficient payment solutions such as real - time payments with the swish mobile application, which is used for transactions that used to be mostly cash - based. similarly, mobile phones can function as card terminals, which gives small business owners increased opportunity to accept cards. swedish banks also have a tradition of cooperating with one another when innovative payment solutions are introduced on the market. in this way, they can make better use of network effects