The krona (Swedish: [²kru:na]; plural: kronor; sign: kr; code: SEK) has been the currency of Sweden since 1873. Both the ISO code "SEK" and currency sign "kr" are in common use; the former precedes or follows the value, the latter usually follows it but, especially in the past, it sometimes preceded the value. In English, the currency is sometimes referred to as the Swedish crown, as krona literally means crown in Swedish. The Swedish krona was the ninth-most traded currency in the world by value in April 2016.
One krona is subdivided into 100 öre (singular and plural; when referring to the currency unit itself, however, the plural form is ören). However, all öre coins have been discontinued as of 30 September 2010. Goods can still be priced in öre, but all sums are rounded to the nearest krona when paying with cash.
Video Swedish krona
History
The introduction of the krona, which replaced at par the riksdaler, was a result of the Scandinavian Monetary Union, which came into effect in 1876 and lasted until the beginning of World War I. The parties to the union were the Scandinavian countries, where the name was krona in Sweden and krone in Denmark and Norway, which in English literally means "crown". The three currencies were on the gold standard, with the krona/krone defined as 1/2480 of a kilogram of pure gold.
After dissolution of the monetary union in August 1914, Sweden, Denmark, and Norway all decided to keep the names of their respective and now separate currencies.
Maps Swedish krona
Coins
Contemporary
On 11 September 2012, the Riksbank announced a new series of coins with new sizes to replace the 1- and 5-krona coins which arrived in October 2016. The design of the coins follows the theme of singer-songwriter Ted Gärdestad's song, "Sol, vind och vatten" (English: "Sun, wind and water"), with the designs depicting the elements on the reverse side of the coins. This also included the reintroduction of the 2-krona coin, while the current 10-krona coin remained the same. The new coins also have a new portrait of the king in their design. One of the reasons for a new series of coins is to end the use of nickel (for allergy reasons). It is expected that vending machines and parking meters will to a fairly high degree stop accepting coins and accept only bank cards or mobile phone payments. Cash is already less used in Sweden, with many young people avoiding cash as much as possible.
History
Between 1873 and 1876, coins in denominations of 1, 2, 5, 10, 25, and 50 öre and 1, 2, 10, and 20 kronor were introduced. The 1, 2 and 5 öre were in bronze, the 10-, 25-, 50-öre and 1-krona and 2-krona were in silver, and the 10- and 20-krona were in gold. Gold 5-krona coins were added in 1881.
In 1873 the Scandinavian Monetary Union currency was fixed so that 248,000 öre purchased 1 kg of gold. In 2017 the price of gold is 365,289 kronor per kg. So one öre in 1873 bought as much gold as 1.47 krona in 2017. So if it is reasonable to have the smallest denomination coin 1 krona today, in 1873 a reasonable smallest denomination coin was 1 öre. A 10 kr gold coin weighed 4.4803 grams with 900 finess so that the fine weight was 4.03327 grams or exactly 1/248th of a kilogram.
In 1902, production of gold coins ceased, and was briefly restarted in 1920 and 1925 before ceasing entirely. Due to metal shortages during World War I, iron replaced bronze between 1917 and 1919. Nickel-bronze replaced silver in the 10, 25 and 50 öre in 1920, with silver returning in 1927.
Metal shortages due to World War II again led to changes in the Swedish coinage. Between 1940 and 1947, the nickel-bronze 10, 25 and 50 öre were again issued. In 1942, iron again replaced bronze (until 1952) and the silver content of the other coins was reduced. In 1962, cupronickel replaced silver in the 10-öre, 25-öre and 50-öre coins.
In 1968, the 2 kronor switched to cupronickel and the 1-krona switched to cupronickel-clad copper (it was replaced entirely by cupronickel in 1982). Nonetheless, all previous mintages of 1- and 2-krona coins are still legal tender, since 1875 and 1876, respectively, though 2-krona coins are extremely rarely seen in circulation as they have not been issued since 1971. The 2-krona coins contained 40% silver until 1966, which meant they had been for several years worth much more than two kronor, so most have been bought and melted down by arbitrageurs, and the rest are kept by collectors). A new design of 2-krona coins will be issued in 2016.
In 1954, 1955 and 1971, five-krona silver coins were produced, with designs similar to contemporary 1- and 2-krona coins. In 1972, a new, smaller 5-krona coin was introduced, struck in cupronickel-clad nickel. The current design has been produced since 1976. Five-krona coins minted since 1954 are legal tender but tend to be kept by collectors for their silver content.
In 1971, the 1- and 2-öre, as well as the 2-krona coins ceased production. The size of the 5-öre coin was reduced in 1972. In 1984, production of the five- and 25-öre coins came to an end, followed by that of the 10-öre in 1991.
In 1991, aluminium-brass ("Nordic gold") 10-krona coins were introduced. Previous 10-krona coins are not legal tender.
Also in 1991, bronze-coloured 50-öre coins were introduced.
Jubilee and commemorative coins have been minted and those since 1897 or later are also legal tender.
The royal motto of the monarch is also inscribed on many of the coins. The 5-krona coin was designed in 1974, at a time when there were political efforts to abandon the monarchy, when there was a new young inexperienced king. The monarchy remained, but the 5-krona was not given a portrait. Coins minted before 1974 have the same size, but contain the portrait of King Gustav VI Adolf and his royal motto.
On 18 December 2008, the Riksbank announced a proposal to phase out the 50-öre, the final öre coin, by 2010. The öre would still remain a subdivision unit for electronic payments. The reason could include low purchasing power, higher production and distribution cost than the value and the coins cannot be used in most parking machines and vending machines. On March 25, 2009, the Riksdag formally decided to enact the law to repeal 50-öre coins as legal tender. Under that law, the final date payments could be made with 50-öre coins was September 30, 2010. Remaining 50-öre coins could be exchanged at banks until the end of March 2011.
Banknotes
Contemporary
History
In 1874, notes were introduced by the Riksbank in denominations of 1 krona and 5, 10, 50, 100 and 1,000 kronor. The 1-krona was only initially issued for two years, although it reappeared between 1914 and 1920. In 1939 and 1958, 10,000-krona notes were issued.
Production of the 5 kronor note ceased in 1981, although a coin had been issued since 1972. With the introduction of a 10-krona coin in 1991, production of 10-krona notes ceased and a 20 kronor note was introduced.
All remaining one-krona banknotes became invalid after 31 December 1987. All remaining five-krona and ten-krona banknotes became invalid after 31 December 1998.
An exhaustive list of every banknote design since 1874 is not included, but the following five designs were or will be retired in 2016-2017. The oldest design began to be printed in 1985.
A 20-krona banknote (a new denomination) was printed 1991-1995 with a portrait of the writer Selma Lagerlöf and on the reverse was an engraved interpretation of a passage from the book Nils Holgersson's Wonderful Journey Through Sweden. The banknote became invalid after 31 December 2005. A more secure version with the same portrait was printed from 1997-2008 and became invalid after 30 June 2016.
A 50-krona banknote (3rd design since 1896) was printed 1996-2003 with a portrait of the singer Jenny Lind and on the reverse was a picture of a silver harp and its tonal range. The banknote became invalid after 31 December 2013. A more secure version with the same portrait was printed from 2006-2011 and became invalid after 30 June 2016.
A 100-krona banknote (3rd design since 1898) was printed 1986-2000 with a portrait of the botanist Carl von Linné (Linnaeus) and on the reverse was a drawing of a bee pollinating a flower. The banknote became invalid after 31 December 2005. A more secure version with the same portrait was introduced in 2001 and became invalid after 30 June 2017.
A 500-krona banknote (a new denomination) in a blue shade was introduced in 1985 with a portrait of King Charles XI and on the reverse an engraving depicts Christopher Polhem, the "father of Swedish engineering". These banknotes became invalid on 31 December 1998. A 500-krona banknote (red, but without foil strips) with the same portrait was printed 1989-2000. This banknote became invalid after 31 December 2005. A more secure version with the same portrait was introduced in 2001 and became invalid after 30 June 2017. The banknote had some controversy in 1985 because of the executions of "Snapphane" guerrilla warriors that King Charles XI ordered.
The first two designs of 1,000-krona banknotes (published from 1894-1950 and 1952-1973) became invalid on 31 December 1987. The largest denomination, the 10,000-krona banknote was scheduled to become invalid after 31 December 1991. In preparation for retirement of large value banknotes, new 1,000-krona banknotes (of the 4th design) honoring Gustav Vasa was prepared. The 3rd design of 1,000-krona banknotes (published from 1976-1988) was declared invalid on 31 December 1998.
A 1,000-krona banknote (without foil strips) was printed 1989-1991 with a portrait of Gustav Vasa and on the reverse is a harvest picture from Olaus Magnus' Description of the Northern Peoples from 1555. The banknote became invalid after 31 December 2013. However, on 15 March 2006, the Riksbank introduced a new, more secure 1,000-krona banknote with the same portrait and the Riksbank became the first central bank in the world to use the security feature of "Motion" (a moving image in the striped band) on the new 1,000-krona banknote. When the banknote is tilted, the picture in the striped band appears to move. The Vasa banknotes with the security thread became invalid after 30 June 2016. Replacement banknotes were circulated in considerably fewer quantities, thus reducing the supply of cash in Sweden.
2015 series
On 6 April 2011, the Riksbank announced the names of the persons whose portraits would decorate the new series of banknotes that would be introduced in 2015. This would also include a new 200-krona banknote. These are:
- Astrid Lindgren on the 20-krona banknote; Purple
- Evert Taube on the 50-krona banknote; Orange
- Greta Garbo on the 100-krona banknote; Blue
- Ingmar Bergman on the 200-krona banknote; Green
- Birgit Nilsson on the 500-krona banknote; Red
- Dag Hammarskjöld on the 1,000-krona banknote; Brown
On 24 April 2012, the Riksbank announced the base for the new designs of the banknotes, based on Göran Österlund's entry titled Cultural Journey.
The first banknotes, the 20-, 50-, 200-, and 1,000-krona, were issued on 1 October 2015 with the other two notes, the 100- and 500-krona, to follow on 3 October 2016.
500 kr banknote controversy
Opera singer Malena Ernman has criticized the Riksbank for choosing a design where Birgit Nilsson has been depicted performing Die Walküre by Richard Wagner. She pointed out that it was very inappropriate to include something by Wagner, whose works were associated with Nazi Germany, in a time of increasing problems with antisemitism in Sweden. Wagner died long before the Nazi era, and the association is that Hitler liked his music. The Riksbank replied saying that it is "unfortunate that the choice of design is seen as negative", and stated that it is not going to be changed.
Dagens Nyheter journalist Björn Wiman went further in his criticism, condemning the Riksbank for selecting Nilsson at all for the 500-krona banknote. He brings up an example from Nilsson's 1995 autobiography, where she described Mauritz Rosengarten from Decca using antisemitic jokes about greed.
Exchange rate
To see where Swedish krona ranks in "most traded currencies", read the article on the Foreign exchange market.
The exchange rate of the Swedish krona against other currencies has historically been dependent on the monetary policy pursued by Sweden at the time. Since the Swedish banking rescue, a managed float regimen has been upheld.
The weakest the krona has been relative to the euro was 6 March 2009 when one euro bought 11.6465 SEK. The strongest the krona has been relative to the euro was on 13 August 2012 when one euro bought 8.2065 SEK. The weakness in the euro was due to the crisis in Greece which began in July 2012 and fear of further spreading to Italy and Spain. The average exchange rate since the beginning of 2002 when the euro banknote and coins were issued and 1 March 2017 was 9.2884 SEK/EUR.
The euro
According to the 1995 accession treaty, Sweden is required to join the eurozone and therefore must convert to the euro once the convergence criteria are met. Notwithstanding this, on 14 September 2003, a consultative Swedish referendum was held on the euro, in which 56% of voters were opposed to the adoption of the currency, out of an overall turnout of 82.6%. The Swedish government has argued such a course of action is possible since one of the requirements for eurozone membership is a prior two-year membership of the ERM II. By simply not joining the exchange rate mechanism, the Swedish government is provided a formal loophole avoiding the theoretical requirement of adopting the euro.
Some (like the Liberals) of Sweden's major parties continue to believe it would be in the national interest to join, but all parties have pledged to abide by the results of the referendum, and none have shown any interest in raising the issue again. There was an agreement among the parties not to discuss the issue before the 2010 general election. In a poll from May 2007, 33.3% were in favour, while 53.8% were against and 13.0% were uncertain.
In February 2009, Fredrik Reinfeldt, the Prime Minister of Sweden stated that a new referendum on the euro issue will not be held until support is gained from the people and all the major parties. Therefore, the timing is now at the discretion of the Social Democrats. He added, the request of Mona Sahlin, former leader of the Social Democratic Party, for deferral of a new referendum until after the 2010 mandate period should be respected.
As of 2014, support for Swedish membership of the euro among the general population is low. In September 2013, support fell as low as 9%. The only party in the Riksdag that supports Swedish entry in the euro (as of 2015) is the centrist Liberal Party.
Banknotes and coins per capita in circulation
Sweden is a wealthy country and in the 1970s and 1980s the value of banknotes and coins per capita was one of the highest in the world. In 1991, the largest banknote worth 10,000kr that was in circulation since 1958 was declared invalid and no longer was legal tender. For a discussion of the financial and banking crisis that hit Sweden in the early 1990s see the article History of Sweden (1991-present) and Swedish banking rescue.
Unlike the USA and Canada which by policy never declare issued money invalid, Sweden and most other European countries have a date when older series of banknotes or older coin designs are invalid and are no longer legal tender. From the years 2001 to 2008 banknotes and coins were circulated at a near constant level of around 12,000 krona per capita, but in 2006 a modified 1,000-krona banknote with a motion security strip was produced. Within seven years the banknotes without the strip were declared invalid, leaving only a radically reduced number of banknotes with foil valid. The Vasa 1,000-krona banknote without the foil strip became invalid after 31 December 2013, and the pieces with the foil strip are invalid after 30 June 2016. Also the Swish mobile payment system was established in Sweden in 2012 and become a popular alternative to cash payments.
Although many countries are performing larger and larger share of transactions by electronic means, Sweden is unique in that it is also reducing its cash in circulation. According to Bank for International Settlements the last year Sweden was surpassed in cash on a per capita basis converted to United States dollars by USA in 1993, the Euro Area in 2003, Australia in 2007, Canada in 2009, United Kingdom and Saudi Arabia in 2013, Korea in 2014, and Russia in 2016. In upcoming years Sweden may be surpassed by Mexico, and Turkey.
The tables show the value of the banknotes and coins per capita for participating countries on Committee on Payments and Market Infrastructures (CPMI). Local currency is convert to US dollars using end of the year rates.
The circulation levels in the table above were reported to the Bank for International Settlements. Possible discrepancies with these statistics and other sources may be because some sources exclude "commemorative banknotes and coins" (3.20% of total for Sweden in 2015) and other sources exclude "banknotes and coin held by banks" (2.68% of total for Sweden in 2015) as opposed "banknotes and coin in circulation outside banks".
Circulation levels of cash on a per capita basis, are reduced by 19.5% from the high in 2007 to 2012; and reduced by 50.04% from 2007 to 2016. By comparison in the USA the amount of currency in circulation increased by 85% from 2007 to 2016. The Riksbanken predicted that between 2012 and 2020, the amount of cash in circulation will decline by 20 to 50 percent. The prediction may prove to be an understatement as the decline has exceeded 38 percent from 2012 to 2016. Speculation about Sweden declaring all banknotes and coins invalid at some future date is widespread in the media with Björn Ulvaeus as a celebrity advocate of a cashless Sweden which he believes will result in a safer society because simple robbery will involve stealing goods that must be fenced.
The Riksbank deposit rate (the deposit rate is the rate of interest banks receive when they deposit funds in their accounts at the Riksbank overnight and is normally 0.75 percentage points lower than the repo rate) dropped to zero percent on December 18, 2013 only two weeks before the 1,000-krona Vasa banknotes without foil became invalid. The deposit rate went negative on July 9, 2014 and is forecast to remain negative through the fourth quarter of 2018. The suspicion became widespread that the huge reduction in circulation levels of the highest denomination banknote is related to monetary policy. Traditional economic theory holds that people will convert bank accounts into cash without the inducement of earning interest. Cecilia Skingsley has stated that "This is a development steered by market forces and not by the authorities. The Riksbank will continue issuing banknotes and coins as long as there is demand for them in society. It is our statutory duty and we will of course live up to it."
The value of the payments between households, companies and authorities in Sweden amounts to about 20,000 kronor annual per capita in cash. In shops, almost one in seven payments is made in cash. More than half of the adult population has the Swish payment app. Annual withdrawals from Swedish ATMs in 2015 amount to 15,300 kronor per capita. According to Skingsley, "what some consumers, smaller companies and local clubs often see as a problem, is not so much getting hold of cash, but being able to deposit it in a bank account."
To see how circulation of the Swedish krona ranks compared to other currencies see Bank for International Settlements#Red Books.
The e-krona
The e-krona is a proposed electronic currency to be issued directly by the Riksbank. It is different than the electronic transfers using commercial bank money as central bank money has no nominal credit risk, as it stands for a claim on the central bank, which cannot go bankrupt.
The declining use of cash in Sweden is going to be reinforced cyclically. As more and more businesses find they can have a functional business without accepting cash, the number of businesses refusing to accept cash will increase. That will re-enforce the need for more and more citizens to get the Swish app which is already used by half the population. Cash machines, which are controlled by a Swedish bank consortium, are being dismantled by the hundreds, especially in rural areas.
The Riksbank has not taken a decision on issuing e-krona. First, the Riksbank needs to investigate a number of technical, legal and practical issues. "The declining use of cash in Sweden means that this is more of a burning issue for us than for most other central banks. Although it may appear simple at first glance to issue e-krona, this is something entirely new for a central bank and there is no precedent to follow". If the Riksbank chooses to issue e-krona, it is not to replace cash, but to act as a complement to it. "The Riksbank will continue issuing banknotes and coins as long as there is demand for them in society. It is our statutory duty and we will of course continue to live up to it," concluded Deputy Governor Cecilia Skingsley.
References
Current SEK exchange rates
See also
- Monetary policy of Sweden
- Swedish National Debt Office
- Tables of historical exchange rates to the United States dollar
- Scandinavian Monetary Union
- Cash rounding
- Economy of Sweden
- Sweden and the euro
References
Further reading
- Krause, Chester L.; Clifford Mishler (1991). Standard Catalog of World Coins: 1801-1991 (18th ed.). Krause Publications. ISBN 0873411501.
- Pick, Albert (1994). Standard Catalog of World Paper Money: General Issues. Colin R. Bruce II and Neil Shafer (editors) (7th ed.). Krause Publications. ISBN 0-87341-207-9.
External links
- Sveriges Riksbank (in English)
- Swedish monetary standards in historical perspective
- Historical and current banknotes of Sweden (in English) (in German)
Source of the article : Wikipedia
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