The Riksbank’s Climate Report 2023

The Riksbank’s work on climate change

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The Riksbank’s work on climate change

The Riksbank takes the climate into account in its cash management and payment infrastructure

Published: 25 January 2023

The Riksbank has the exclusive right to issue banknotes and coins in Sweden. This means that the Riksbank both supplies and destroys banknotes and coins, as well as redeeming banknotes that are no longer legal tender. In the lower denominations, the Riksbank issues coins instead of banknotes. Lower denominations are used more often and therefore suffer more wear than higher denominations, and coins last longer than banknotes. In 2015, the Riksbank introduced a new banknote and coin series. The new coins are lighter than the previous versions, meaning lower transport costs, among other things. The Riksbank has also stopped using nickel and other alloys that were used in older coins. Steel, which has a lower environmental impact from mining, is mostly used today. Nickel and other alloys can also cause allergy problems for people using the coins.

The Riksbank requires some of the cotton used in banknote paper to be grown organically, meaning without pesticides and with regard to the natural environment and human beings. The cotton is certified by the Global Organic Textile Standard (GOTS). The paper in Swedish banknotes is also designed to be as physically sustainable as possible and to withstand dirt and wear. This ensures that the banknotes last a long time and do not need to be replaced so often. In 2022, the Riksbank also started using new banknote sorting machines that automatically determine when used banknotes should be destroyed. This means that banknotes can circulate for longer than before, meaning that fewer banknotes need to be printed.

When the Riksbank finally destroys worn and invalid banknotes, the waste material is burned by Swedish heating plants and used for district heating. Worn and invalid coins are sold so that the metal can be melted down and recycled.

ISO certification required

The Riksbank requires the companies manufacturing Sweden’s banknotes and coins to be ISO-certified in terms of quality, the environment and the working environment, and to have a well-developed CSR policy.[33] Corporate Social Responsibility. Both the manufacturer of banknotes and the manufacturer of coins are certified according to ISO 14001, an environmental management system that helps different types of organisations to reduce their environmental impact but also serves as a support for business development. This certification means that the manufacturers aim to reduce their environmental impact by limiting their emissions to waste water and landfill and reducing their use of water and energy. The Riksbank’s banknote manufacturers also make efforts to reuse destroyed banknotes in the production of new ones. The goal is a circular economy, where everything that is used can be reused.

Climate perspective in the payment infrastructure

The Riksbank also monitors developments in the payments market and continuously analyses the use of cash and other means of payment in the economy. This is to be able, if necessary, to adapt our activities to changes in society in the most sustainable way for the environment and individuals. In the Payment Report for 2022, the Riksbank assesses whether payments in Sweden are safe and efficient. One factor in the assessment of efficiency is that the costs to society, including energy consumption, for various methods of payment should be low. Energy consumption for card payments is assessed to be lower than for cash. For crypto-assets, it is primarily the underlying technology that determines energy efficiency. Some crypto-assets have extremely high energy consumption, while others are more energy efficient than charge cards, for example.

RIX-INST settlement service

In 2022, the Riksbank launched the RIX-INST service, which will enable banks to offer more account-to-account payments that reach the recipient immediately. Currently, households and companies use the mobile service Swish to make and receive instant payments. Swish payments are currently settled via the banks’ accounts in a private system called BiR (Betalningar i Realtid). The plan is to move Swish from the privately owned platform to RIX-INST before summer 2023, when Swish payments will be settled with money in the banks’ accounts at the Riksbank, known as central bank money. Central bank money is secure because the Swedish state stands as guarantor. RIX-INST uses the Eurosystem’s platform for instant payments TIPS (TARGET Instant Payment Settlement).

According to a report from Banca d’Italia, the TIPS platform has a low carbon footprint.[34] P. Tiberi (2021), The carbon footprint of the Target Instant Payment Settlement (TIPS) system: a comparative analysis with Bitcoin and other infrastructures Research Paper, nr 5, Banca d’Italia. Among other things, the report compares TIPS' energy consumption with the Visa card network. The results indicate that TIPS is a more energy-efficient option, although the report points out that the comparison is between systems that handle different total volumes of transactions per year. The report also compares the carbon footprint of Bitcoin in 2019 and finds that Bitcoin had a carbon footprint that was almost 40,000 times greater than that of TIPS.