stefan ingves : cash management - an important social issue speech by mr stefan ingves, governor of the sveriges riksbank, to the first meeting at the sveriges riksbank of the cash management advisory board, stockholm, 26 april 2006. * * * i would like to welcome you all to the first meeting of the new cash management advisory board. all of you sitting at this table are in some way concerned with cash management in the economy : banks, cash - in - transit companies, representatives of the retail trade, trade unions and authorities such as finansinspektionen ( the swedish financial supervisory authority ), the police and the swedish work environment agency. my hope is that the advisory board will function as a forum for identifying and discussing issues in the field of cash management. the idea is that we should meet once or twice a year, and i look forward to fruitful discussions. before opening the debate, i would like to mention two questions that i believe can form a starting point for our discussions : • the process of change undergone by cash management in recent years and the new structure for cash management that the riksbank is establishing together with the banks. • the social problem comprised by the many and increasingly violent robberies of cash transports. towards a more expedient structure for cash management one of the riksbank ’ s tasks is to promote a safe and efficient payment system, and we are responsible for issuing banknotes and coins. these are important function with regard to cash management in the economy. at the end of the 1990s, the riksbank began work on achieving greater efficiency in cash management. we observed in the surveys made then that there were deficiencies in the system. this was partly due to the way the riksbank organised its work. by offering a service to the banks without charging in full for it, the riksbank had contributed to the preservation of an outdated cash management structure and inefficient methods of working, which included extensive cash - in - transit transports to and from the riksbank for the sole purpose of avoiding interest costs overnight. this system was very costly, while it led to unnecessary risks for cash - in - transit companies. the riksbank therefore wanted to make the cost of cash management more visible and allow the banks and other participants to bear the costs, which would give them a clear motive to make operations more efficient. the aim was to stimulate greater competition and increased product development for services

will be right, i envisage two possible ways forward for the major swedish banks, both of which represent extremes. the first strategy would be based on the banks ’ proven proficiency in terms of organisation and distribution, and to refine this strength and also become better at peripheral advisory services. fewer resources would be invested in product development and risk - taking – products can easily be copied and risks sold on to other, hungrier investors. the second strategy would instead be to rediscover what you could call “ classic ” banking, in other words healthy risk - taking underpinned by better knowledge about certain risks and conditions than the market in general. as long as higher loan losses and larger earnings fluctuations are kept at a bearable level and are compensated for by higher margins, then risk - taking in itself is not bad business. however, as a central bank governor i do not want to inspire the banks to take on higher risk but instead would encourage them to make use of the opportunities in today ’ s financial markets to repackage and spread risk, but like i said that is a different perspective. 4 / 4