Norway: No Urgent Need to Create a CBDC Despite Current Global Hype

A top official of Norway’s central bank stated that while the country is investigating a possible central bank digital currency (CBDC), there was no “acute need” for a digital krone. 

Cash Usage Decline Prompts CBDC research

Speaking at Norway’s Payment Conference, Ida Wolden Bache, the deputy governor of the Norges Bank stated that the central bank has been conducting research on CBDC for close to four years. However, Wolden Bache stated that the apex bank was in no hurry to develop a digital krone.

The research into CBDC is motivated by declining cash usage and “precautionary principle”. According to the Norges bank executive, more people in the country are adopting new payment methods while moving away from cash. The decline in cash use further nosedived as a result of the COVID-19 pandemic.

Results from a payments survey carried out in October 2020 showed that cash payment in Norway was only 4 percent. Although there is a preference for digital forms of payments, Wolden Bache, however, highlighted some attributes of cash. Wolden Bache went raise some questions regarding the introduction of CBDCs:

“The question is whether something important will be lost if cash dies out and we do not introduce CBDC? Is central bank money crucial to confidence in the monetary system? Could CBDC provide more than cash can offer, in the form of a greater range of uses and more innovation?”

Wolden Bache also stated that developing a national digital currency could cause a significant change in the country’s financial system. Furthermore, there could be an adjustment to the country’s Central Bank Act.

The Norges bank top official stated that research in a possible digital krone has entered the third stage which would be completed by 2021. Wolden Bache also said that the government was contemplating the technical aspects while evaluating modalities for digital krone experiments and trials. Also, the apex bank is observing other central banks’ CBDC projects.

CBDC Push to Gaining Traction Across the World

Sweden, just like Norway, is also experiencing declining cash use and is working on developing its own CBDC project known as the e-krona. Although Sweden’s central bank governor Stefan Ingves is pushing for the launch of the e-krona, the country’s apex bank is yet to make a decision on the issuance of a CBDC.
CBDCs continue to see increased interest across the globe with central banks either researching or already testing their national digital currencies. Australia recently collaborated with ConsenSys and other top financial institutions to release a proof-of-concept on wholesale CBDCs.

Cambodia on the other hand, launched its CBDC called Project Bakong, while China’s digital yuan testing recorded 2 billion yuan ($300 million) in payments gotten from over 4 million transactions.