As a researcher with extensive experience in the field of central banking, I find myself closely following the developments at Norges Bank and their potential foray into CBDC. Having worked in multiple countries, I have observed that each nation has its unique approach to embracing technological advancements, and Norway’s cautious yet deliberate pace is no exception.
In the coming year, it’s expected that Norges Bank, the central banking authority of Norway, will consider and possibly implement the creation of a central bank digital currency (CBDC).
As stated by Deputy Governor Pal Longva, the central bank is progressing towards concluding its suggestion, although he doesn’t believe a rush to implement it right away is necessary.
As a researcher, I’ve observed that while other European nations such as Switzerland are progressing swiftly with digital currency initiatives, Norway tends to approach such matters with prudence and patience, moving forward at a deliberate pace.
“We are in line with many central banks — we are studying complex issues and have much to consider before proceeding,” Longva said during an interview in Oslo.
He made clear that Norway is keeping up with the competition in terms of the digital currency game, just like Switzerland who’s also progressing at a steady pace. However, Norway is carefully considering all the intricacies before deciding on implementing a Central Bank Digital Currency (CBDC) project.
Evaluating Retail Vs. Wholesale CBDC Options
The Norwegian Central Bank is at present exploring two potential designs for Central Bank Digital Currencies (CBDCs). One of these models, called retail CBDC, is intended for use by everyday consumers, while the other, known as wholesale CBDC, is designed for financial transactions that occur between banks.
At present, Norges Bank is leaning towards the retail-centric Central Bank Digital Currency (CBDC) approach, which is currently experiencing significant growth and recognition in numerous global central bank research projects.
According to Longva, implementing a whole sale version of Central Bank Digital Currency (CBDC) might prove simpler than a retail one due to complexities that, for the moment, seem more challenging. These issues necessitate ongoing discussions with private financial institutions and other relevant parties.
As an analyst, I find it noteworthy that many central banks appear to be leaning towards the wholesale model for Central Bank Digital Currencies (CBDCs), as per the latest survey by the Bank for International Settlements. It seems more likely now that we might witness the launch of a wholesale CBDC within the next six years, rather than a retail one.
A Stable Cashless Society
In a 2023 survey by trading platforms, it was found that Norway is among the societies with the least use of physical cash, as approximately 98% of its population prefers debit cards and more than 95% depends on mobile payment methods.
Despite a significant drop in cash usage, recent data indicates that its use has stabilized at minimal levels. A mere 2% of participants in a Norges Bank survey admitted to using cash during their latest in-store transaction.
In light of the growing trend towards digital transactions, Norges Bank is examining the potential repercussions of Central Bank Digital Currency (CBDC), particularly focusing on privacy issues and effects on the banking industry. Ultimately, it’s up to the government to determine whether Norway will adopt a digital currency as its official tender.
By 2025, the central bank aims to offer its advice following the completion of their research and discussions.
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2024-10-24 18:11