Sweden’s decision to require essential businesses to continue accepting physical cash is exposing the vulnerabilities behind Europe’s drive toward a cashless economy, raising fresh questions about the future of digital payments and the proposed digital euro.
For years, Sweden was held up as one of the world’s leading examples of the transition toward a cashless society. Alongside countries such as Norway and Denmark, it embraced mobile payments and rapid financial digitalisation, while the use of banknotes steadily declined.
According to Sweden’s central bank, the Riksbank, only 5 percent of consumers said they had used cash for their most recent in-store purchase in 2025, down from 10 percent in 2023 and around 40 percent 15 years earlier.
But Sweden has now taken a significant step back from the idea that cash can simply disappear.
New legislation that came into force on July 1 requires essential businesses, including grocery stores and pharmacies, to accept physical cash. At the same time, the Riksbank and civil defence authorities have urged households to maintain a cash reserve, recommending that each adult keep at least 1,000 Swedish kronor, or roughly $100, at home.
The message is clear: cash is no longer being treated simply as an outdated payment method. It is increasingly viewed as a safeguard against disruptions to critical infrastructure and an important component of national resilience.
Scandinavia rethinks the cashless model
Sweden is not alone in reconsidering the risks of a fully digital payments system.
Norway strengthened consumers’ legal right to pay with cash in 2024, introducing protections for transactions of up to 20,000 Norwegian kroner, roughly $2,000. The rules were reinforced with financial penalties for businesses that refuse to comply, with enforcement beginning in May 2025.
The shift is striking because both Sweden and Norway have been among Europe’s most enthusiastic adopters of digital payments.
Their change in direction suggests that the disappearance of cash may be more complicated than previously assumed. The very digital infrastructure that makes electronic payments convenient can also leave economies vulnerable to cyberattacks, power failures and other large-scale disruptions.
That creates a tension within European policy. While some governments are telling citizens to keep cash available as an emergency backup, authorities across the continent are simultaneously restricting its use.
From July 2027, the European Union will introduce a €10,000 limit on cash transactions across the bloc, although individual countries can impose lower thresholds. France, Spain and Portugal have limits as low as €1,000, while Greece has set a €500 threshold for certain transactions.
Cash remains popular across Europe
The Nordic retreat also highlights a broader reality: Europe is not uniformly moving toward a cashless economy.
The European Central Bank’s study of payment habits in the euro area shows that cash remains the most commonly used payment method at physical points of sale across the bloc.
In countries including Italy, Malta, Austria, Spain, Greece and Germany, consumers continue to rely heavily on banknotes despite the widespread availability of digital alternatives.
The reasons go beyond convenience. Privacy, financial independence and distrust of excessive institutional monitoring all contribute to the continued popularity of cash. Some consumers also say that paying with physical money makes it easier to control spending and manage household budgets.
This suggests that the decline of cash is not simply the result of consumers voluntarily abandoning it. Government policy and the rapid expansion of digital payment infrastructure have played a major role in accelerating the transition.
A warning for the digital euro
The experience of Sweden and Norway could also complicate the European Central Bank’s plans for a digital euro.
The ECB has presented a central bank digital currency as a way to modernise the eurozone’s payments infrastructure, strengthen monetary autonomy and provide consumers with a publicly backed digital payment option.
But the vulnerabilities that have prompted Sweden to reinforce the role of cash would not disappear with the introduction of a digital euro. A financial system based almost entirely on electronic transactions would depend on electricity networks, telecommunications infrastructure, data centres, cloud systems and other critical technologies.
A major cyberattack, prolonged power outage or coordinated infrastructure disruption could therefore have consequences far beyond those of a temporary failure at an individual bank or payment provider.
Physical cash provides a fundamentally different form of redundancy. It can be exchanged without electricity, internet access, digital authentication or a functioning payment network.
That makes cash particularly valuable in emergencies, even in countries where everyday use has become marginal.
Digitalisation and the question of choice
There is also a social dimension to the debate.
A rapid shift away from physical money can create barriers for people who struggle to use digital financial services, including some elderly and disabled consumers, people without bank accounts and those with limited digital skills.
But exclusion is not limited to people who cannot use digital payments. Some consumers simply prefer cash because they value privacy, want greater control over their spending or do not want every transaction to depend on a digital platform.
For policymakers, the question is therefore not only whether digital payments are more efficient, but whether consumers should retain the freedom to choose between digital and physical money.
Sweden’s reversal suggests that even one of Europe’s most advanced cashless economies does not consider that choice obsolete.
The lesson for Europe may be that digitalisation does not necessarily require the elimination of cash. As governments prepare for a more digital financial system, physical money could remain an important backup — and, for many consumers, an important form of choice.
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