Bitrabo Editorial
In the upcoming year, Norges Bank, the central bank of Norway, is set to make a significant decision on the potential introduction of its own central bank digital currency (CBDC).
Deputy Governor Pal Longva stated that the central bank is on track to finalize its recommendation, although there is no immediate rush to expedite the process.
While countries like Switzerland are advancing their digital currency initiatives, Norway is approaching the matter with caution and deliberation.
“We are aligned with many other central banks in studying intricate issues and have numerous factors to consider before moving forward,” Longva commented during an interview held in Oslo.
Longva emphasized that Norway is not lagging behind and is actively analyzing the various complexities involved before deciding on a possible CBDC initiative.
Examining Retail vs. Wholesale CBDC Models
Norges Bank is exploring two models for CBDC: a retail version meant for consumers and a wholesale version designed for inter-bank transactions.
Currently, the bank is prioritizing the wholesale CBDC model, which is receiving considerable attention from central banks globally.
Longva noted that the wholesale CBDC may be simpler to implement compared to the retail version, as the latter involves more complex issues and would necessitate discussions with private banks and other relevant parties.
A survey by the Bank for International Settlements indicates a growing trend among central banks toward the wholesale model, suggesting that it is more likely a wholesale CBDC will be operational within six years compared to a retail one.
A Flourishing Cashless Economy
Norway ranks among the most cashless societies globally, with 98% of its citizens using debit cards and over 95% utilizing mobile payment options, according to a 2023 survey by Trading Platforms.
Though cash usage has significantly decreased, recent data indicates a stabilization at low levels, with only 2% of participants reporting cash use in their last physical store transaction, as per a survey by Norges Bank.
Considering the gradual shift toward digital payments, Norges Bank is weighing the implications of a CBDC, particularly regarding privacy and its effects on the banking sector. Ultimately, the government will decide on the adoption of a digital currency.
The central bank aims to complete its research and consultations and present its recommendation by 2025.
Featured image from Innovation Norway, chart from TradingView