If deregulation is to improve competition and efficiency, banks must be free to adjust their pricing not just on interest rates but  BIS Review 3/2001  1  also on fees and charges. I have absolutely no argument with this. However, I very much hope that banks will display some sensitivity on this, and will bear in mind the public interest. They should also ensure that their pricing is transparent, and that customers have good notice of any changes. 7. In addition to interest rate deregulation, there are a number of other market reform measures originating from the consultancy report published a year or so ago which are still being progressed. For example, later this year we will consider whether there should be some further relaxation of the restriction on the opening of branches by foreign banks which have entered the market since 1978. We also plan to review whether the three-tier system of authorisation might be reduced to two tiers, although we do not plan to visit this issue until next year – i.e. 2002 - and have quite an open mind on this. This is rather later than we originally intended. But it reflects the fact that we believe that the present system is working reasonably well and that there is no pressing need to change.
For sums higher than this it was cheaper to use cards. If we now compare this with the choices that the consumers actually made, the conclusion is that in 2002 it would have been better from the point of view of the Swedish economy if the consumers had made more payments by card and fewer payments in cash. From society’s point of view, it was profitable to pay by card when the sums were higher than SEK 70, but, as was the investigation from 2006 made evident, the “average consumer” nevertheless chose to wait until the sums were higher than SEK 123. Eight years have now passed since the study was conducted and it is much more likely that the costs of using cash have increased rather than decreased. For example, the costs for increasing the security of transportation and ATMs have been substantial. On the other hand, available evidence suggests that a card payment costs somewhat less today. One reason for this is that the shops’ costs for getting a card payment redeemed seem to have fallen due to increased competition between the card acquirers. The level at which it becomes more advantageous to the economy to use cards rather than cash has therefore probably fallen below SEK 70. The survey we conducted last year shows that we use cards to an increasing extent and for smaller and smaller payments. It is not unlikely that today’s “average consumer” would choose to pay by card for an amount below SEK 123.