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Norges Bank manager Oystein Olsen, who has not shown much enthusiasm for central bank digital currencies (CBDCs) in the past, says the feasibility study is currently “intensified.” Over the next two years, the bank plans to acquire more knowledge in this area and conduct “pilot tests of technical solutions” to ensure it understands the “purpose and implications” of introducing CBDC, according to the report.
The bank has already spent four years in preliminary investigations, but has so far hesitated as others move forward. Central banks around the world are working to respond to the widespread abandonment of cash by creating their own crypto-inspired digital currencies like bitcoin, as well as private initiatives, including Diem, sponsored by Facebook Inc.
Only 3-4% Operations in Norway are carried out with banknotes and coins, according to Norges Bank. The bank estimates that this is the lowest level of cash use in the world. In neighboring Sweden, which is among the most advanced countries in developing CBDC, the figure is 9 percent, according to the McKinsey Global Payments Report.
Johanna Jeansson, Nordic Economist, says:
“The acceleration in interest rates (in central bank digital currencies) is explained by several key points. The Covid-19 crisis has reduced the need for cash as more people shop online. In addition, money Private digital company like Facebook Diem is urging lawmakers to explore their own options. And finally, when big economies like the United States and the eurozone begin to consider a problem, others tend to follow suit. “
“The central bank’s digital money is yet to be introduced,” Olsen said. The plan, released Thursday, “reflects the fact that Norges Bank does not yet see the need to introduce that money,” he said.
Mr. Olsen also argued that any decision on the CBDC would require the involvement of politicians and possibly changes to Norwegian law.
At that point, Sweden could introduce the central bank’s digital currency in five years, Stefan Ingves, governor of the Riksbank, said recently. Sweden, on the other hand, has long delayed the introduction of CBDC and has recently recognized that this task is more complex and time-consuming than initially expected.
Norges Bank will spend the next two years testing different CBDC models before deciding which version to choose for the pilot project.
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