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Sunday, May 26, 2024

‘Krone’ weakens again but Norway secures its use for cash payments

The value of Norway’s historically weak krone sank again heading into the weekend, but Norwegians have at least been assured of legally being able to spend their kroner in cash form. Despite the government’s constant push towards digitalization, it’s strengthening state law giving consumers the right to pay for goods and services in cash.

The Norwegian government is moving forward with plans to strengthen consumers’ rights to pay with cash.  PHOTO: Norges Bank

“We keep seeing examples of how the law is challenged,” said Justice Minister Emilie Enger Mehl when she recently confirmed plans to clarify and firm it up. Increasing numbers of shops, restaurants, cinemas and other retailers in Norway refuse to accept cash, but that’s actually a violation of Norwegian law covering financial transactions.

There’s also been a noticeable reduction of automated teller machines (ATMs or minibanks as they’re called in Norwegian) in Norway, and those remaining in the Oslo area recently began charging a 10-krone fee per transaction. Actual bank branches where customers can withdraw cash from their accounts have all but disappeared in many Norwegian cities.

Mehl nonetheless stresses that cash remains important in the event of cyber attacks, massive power failures or other breakdowns in electronic payment systems. Norway’s guidelines for national preparedness urge Norwegians to have cash on hand in various denominations, to pay for essential items if or when electronic pay terminals break down.

Many Norwegians, especially the elderly or those with poor eyesight, remain reluctant to use bank cards and payment terminals, also for privacy reasons. It’s the preparedness aspects, though, that have motivated the government to strengthen the law that covers use of cash: “Relying entirely on digital payment systems increases vulnerability, and in some situations can harm important public functions,” said Mehl, who represents the Center Party. “If no one pays with cash and no one accepts cash, our cash will no longer be part of preparedness in a crisis.”

She’s thus moving forward with efforts to preserve Norwegians’ right to pay for goods and services with cash. The strengthened law will give consumers the right to pay with cash in all sales locations where business owners sell goods or services, as long as the merchants accept or demand payment inside the locale. That includes all retail establishments plus, for example, cinemas, restaurants, hotels, exercise studios, hair salons and other personal care providers. All merchants offering digital payment solutions must also accept cash, with few exceptions.

The value of Norway’s krone, meanwhile, tumbled again this week, and deeper than earlier this month, with one US dollar costing more than NOK 11 on Thursday and Friday afternoon. Many analysts tie the weakening, though, to an unusually strong dollar (a euro cost NOK 11.74 and a British pound cost NOK 13.72) and other “global drivers” that have little to do with the Norwegian economy itself. It remains fairly strong and even saw inflation fall to 3.9 percent last month.

Norway’s krone also usually strengthens when the price of oil goes up, but not this time. A barrel of Norways’s North Sea crude did rise after more drama in the Middle East last weekend, but the Norwegian krone ended up weakening. It  held up better than the Swedish krone, though, and analysts cite more “foreign forces” than trouble at home.

“There’s a repricing of interest rate expectations in the US behind this,” Bjørn Roger Wilhelmsen, chief economist at Nordkinn Asset Management, told newspaper Dagens Næringsliv (DN). “I personally think most of the movement in the (US) dollar is based on key American numbers affecting the market,” and the krone.

NewsinEnglish.no/Nina Berglund

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