Norway’s Norges Bank Looks to Develop CBDC State Backed Cryptocurrency
In a world that cash is becoming less of a feature, Norway's Central Bank, Norges, is exploring options to include its digital currency as an alternative to fiat currency. In a working paper authored by the reserve bank of Norway, experts within the Norges Bank working group are looking at aspects they believe could help develop a central bank digital currency(CBDC).
Additionally, the report from the Norges Bank working group emphasizes on potential CBDC applications with at least three use cases brought to the attention
- Use as an alternative deposit to private banks
- As a legal tender and a supplement to cash
- As an independent solution for the electronic payment systems
The report further states that the CBDC could go into use as an alternative means to storing assets for the bank's customers. According to Norges Bank, the cryptocurrency concept works as an independent foundation and will not interfere with the bank's financial capabilities. In a statement looking to support the study, the bank's Governor Oystein Olsen penned
“Technological advances have brought this issue to the fore. A decline in cash usage has prompted us to think about a number of attributes that are important for ensuring an efficient and robust payment system and confidence in the monetary system is still needed.”
However, for now, the report remains a theory as Norges Bank continues only to issue cash. Still, this does not change the fact that the bank's working group is still studying the CBDC potential and it concludes the study by stating
“It is too early to conclude whether Norges Bank could take the initiative to introduce a CBDC. The impacts of a CBDC and socio-economic cost-benefit analysis will depend on the specific design, which, in turn, depends significantly on the purpose of introducing the CBDC.”
Potential CBDC In Sight?
Norges Bank is only analyzing the potential aspects to creating the CBDC in the report. Although countries such as Venezuela own their state-backed cryptocurrency, the process is risky and complicated. Similarly, Sweden's Riksbank is on course to explore the use of an e-krona to counter the decreasing cash circulation.