Norway Considering Central Bank-issued Digital Currency

The central bank of Norway, Norges bank, is looking to possibly develop its own cryptocurrency as a way of enhancing its monetary infrastructure. The institution released a working paper on May 18th that sheds light on the details, and investigates the properties of digital currency technology.

Nobody Uses Cash in Norway Anymore

The basis for the currency appears to stem from a lack of confidence in Norway’s financial system. Bank governor Oystein Olsen explained:

“A decline in cash usage has prompted us to think about whether at some future date a number of new attributes that are important for ensuring an efficient and robust payment system and confidence in the monetary system will be needed.”

The authors of the report discuss three possible central bank digital currency applications: the “introduction of a reliable alternative to deposits in private banks,” a “suitable legal tender as a supplement to cash,” and an “independent backup solution for electronic payment systems.”

Crypto Is the Way of the Future

The document further states that a central bank-issued digital currency could also provide customers with an alternative method to store financial assets. Norges Bank, however, claims that the foundation of a central bank digital currency should not interfere with financial establishments in and around Norway, and that these institutions should still be able to do their jobs and provide lines of credit to applicable customers.

Norges executives have stated that they will continue to supply cash to clients where a demand for it continues.

Only Time Will Tell

Right now, a central bank digital currency is undergoing early testing. The working group involved in the currency’s establishment states:

“It is too early to conclude whether Norges Bank should take the initiative in introducing a CBDC. The impacts of a CBDC and the socio-economic cost-benefit analysis will depend on the specific design, which, in turn, will depend greatly on the purpose of introducing a CBDC.”

Other banks throughout Europe have also taken similar initiatives, such as Sweden’s Riksbank. The establishment is now considering the release of what’s known as the “e-krona” due to declining cash circulation within the country.

A Global Trend?

In addition, several countries both in and outside Europe have already either released national digital currencies, or are examining the possibilities of doing so. Some of these countries include Tunisia, Senegal, Ecuador, Estonia, and the Marshall Islands. Iran has hinted at plans to issue a sanction-busting national cryptocurrency. Russia is said to be working on creating the CryptoRuble.

To view Norges Bank’s entire 53-page report, click here.

Will we see more central banks throughout the world release digital currencies? Post your thoughts below.

Images via Pixabay, Wikimedia

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