At a coffee shop chain in Stockholm one can buy a plastic card for SEK 20 and then charge it with cash in any of the chain’s shops. If one uses the card one receives a discount when buying coffee and sandwiches. There is also a discount on buns and other items. It is evidently rational management at the sales outlets and, moreover, is appreciated by the consumers. We Stockholmers can also take pleasure in the congestion charges, where the fee is automatically drawn from our bank accounts when our cars are automatically registered when passing the control points. There are many technical innovations, even with respect to account-based payments. And how about the future…? An important task for us who work at the Riksbank is to assess how the Swedish economy will develop in the future. The art of making accurate forecasts fills us with respect. I shall therefore refrain from all categoric statements about what will happen with payments. Developments are steered by technology and I am no engineer. However, allow me to make a few reflections and guesses. •  I believe the “cashless society” is as far away as the “paperless society” was when one once began to speak of it. There will always be a need for banknotes and coins, although cash transactions continue to decline as a share of GDP. Cash is an efficient form of legal tender for certain purposes and will continue to be so.
When we look at future prospects, a good estimate for the output gap can therefore provide a better indication of the outlook for wage and price inflation. Both these simple measures are based on stylised assumptions concerning productivity growth and must therefore be used with caution. Wage gap1) and output gap Per cent 4  4  3  3  Output gap  2  2  1  1  Wage gap  0  0  -1  -1 -2  -2 1) Up to 2000: difference between rise in hourly labour costs in manufacturing in Norway and among trading partners. Thereafter growth in excess of 4.5 per cent. -3 -4 1991  1992  1993  1994  1995  1996  1997  1998  1999  2000  2001  -3 -4  2002  Sources: Statistics Norway, TRCIS/IMF and Norges Bank SG Gausdal 31.01.03  The high level of wage growth in 2002 implied a tight monetary policy. The interest rate differential against trading partners widened. The krone appreciated further. Relationships in the foreign exchange market are unstable, but there are a number of fundamental forces that influence the krone. High oil prices and the phasing in of petroleum revenues into the Norwegian economy are part of the explanation, but the predominant factor is probably the cyclical divergence between Norway and abroad. Krone exchange rate1) and 12-month interest rate differential against trading partners.