Next year, Norges Bank, Norway’s central bank, will make a major decision on whether to create its own CBDC, or central bank digital currency.
According to Deputy Governor Pal Lungva, the central bank was heading towards… Finalizing the recommendationalthough it was not necessary to speed up the work immediately.
In fact, other European countries, such as Switzerland, are moving forward with digital currency projects. Norway, on the other hand, will always take its time and move cautiously.
“We agree with many central banks – we are examining complex issues and have a lot to consider before moving forward,” Lungva said during an interview in Oslo.
He expressed that Norway is not lagging behind in the game, while Switzerland, for example, is moving forward with similar plans. Norway is examining the complexities involved before committing to any form of agreement CBDC software.
Retail Valuation Vs. Wholesale CBDC Options
Norges Bank is currently developing two potential CBDC models, including a retail CBDC, which will be used by consumers, and a wholesale CBDC for interbank transactions.
At the moment, Norges Bank is more focused on the wholesale CBDC approach, which is currently gaining a strong foothold in various studies conducted by central banks around the world.
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Issuing a wholesale version of a central bank digital currency may be easier to deploy than a retail version because, for now at least, it poses issues that appear to be a bit more complex and require more dialogue with private banks as well as other stakeholders, Lungva said.
Other central banks are also turning to a wholesale model, according to the Bank for International Settlements survey. The latest thinking suggests that a wholesale CBDC is likely to be released into circulation within a six-year period of a retail CBDC.
A stable, cashless society
Norway is one of the most Cashless societies In the world because 98% of its population uses debit cards and more than 95% rely on mobile payment platforms, according to a Trading Platforms survey conducted in 2023.
Source: Money
Source: Despite the sharp decline in cash use, recent figures show it has stabilized at low levels. Only 2% of respondents reported using cash for their last purchase at a physical store, according to a Norges Bank survey.
With this light transition to digital payments, Norges Bank is considering all the implications of a CBDC, especially with regard to privacy concerns and impacts on the banking sector. It is the government’s right to decide whether Norway will use digital currency or not.
All the central bank is trying to do is submit its recommendation by 2025 after completing studies and consultations.
Featured image from Innovation Norway, chart from TradingView
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