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BankID technically isn’t compulsory in Sweden, but life without it is A LOT harder now that every service has been adapted to its availability.
It's like a driver's license/state ID in the USA, not mandatory but life is a lot harder without it.
Not actually compulsory - but you won't be able to get a job without it.

Government seems to be being disingenuous in its response to public reaction.

This is a whole bunch of noise, the reality is the only thing matters is adoption. The UK has tried pushing some form of digital ID for years, and its led to nothing. The old traditional means of verifying oneself has continued to be the way, and will be the way, until the ID is coupled with tremendous economic benefits for which folks are happy to adopt it.