Norges Bank, the central bank of Norway, revealed that the Scandinavian country is weighing up the risks and opportunities of releasing its own digital currency.
A report issued by a Norges Bank working group on May 18 revealed that a “decline in cash usage” prompted the central bank to assess “whether Norges Bank should issue a CBDC” (central bank digital currency) to “ensure confidence in money and the monetary system.”
In the introduction to the working paper, Norges Bank Governor Øystein Olsen wrote that the working group identified three potential purposes of using a CBDC - to “ensure a public and credit risk-free alternative” to cash deposits in private banks, to “function as an independent back-up solution for ordinary electronic payment systems, and to “ensure the existence of suitable legal tender as a supplement to cash.”
Although Norges Bank have said that they will continue to provide banknotes “as long as there is a demand for cash,” the central bank is preparing for all eventualities. Cash use in Norway and Sweden has declined to record low levels as the Scandinavian economies have become increasingly digitized.
Norway’s study on releasing a CBDC echoes similar moves by Switzerland and Sweden, whose officials have called for investigations into digital currency adoption. Venezuela became the first country to experiment with a state-backed digital currency, called the Petro, in February 2018. The government of the Marshall Islands have laid out a roadmap to implement a national cryptocurrency by the end of the year. Officials from Russia and Iran have also hinted that their countries may be considering adopting a state-sponsored cryptocurrency.