Central Bank of Norway mulls introducing a new form of currency
The Central Bank of Norway is considering introducing a cryptocurrency to replace tradition cash.
The move by Norges Bank is due to a decline in the use of physical money in the country.
Amid a large slump in the use of coins and notes, the Central Bank of Norway has set up a working group to investigate the possibility of introducing a digital currency instead.
Based on investigations by the group, the Central Bank of Norway has released a report a titled “Central Bank Digital Currencies.”
The paper explains that, as Norwegian citizens are turning away from physical forms of currency, the bank must consider “a number of new attributes that are important for ensuring an efficient and robust payment system.”
Out with the old, in with the new
The DNB bank in Norway has already stopped handling cash.
Trond Bentestuen, Vice President of Wealth Management and Insurance at the bank, says most citizens don’t use physical money anymore.
Speaking to local media in 2016, Bentestuen said that only six percent of Norwegians carry cash for everyday use.
Furthermore, the Deputy Governor of Norges Bank, Jon Nicolaisen, declared in a speech last April that cash’s role “continues to diminish.”
Nicolaisen explains that consumers are moving towards electronic payments, adding:
“For many consumers, electronic central bank money could provide an alternative to depositing money in a bank, as cash does today.”
The new report looks at various features and purposes for a Central Bank of Norway digital currency.
It suggests that some roles “merit further consideration,” such as an alternative to deposits in private banks.
The bank also states that a cryptocurrency could also serve as a backup solution for the conventional electronic payment systems and provide a suitable legal tender to supplement cash.
Not so decentralized
Unusually, the bank describes Blockchain-based systems as “immature” and suggest an “account-based” model instead.
However, a decentralized option the report recommends includes storing money on chips such as pre-paid cards, adding:
“A CBDC raises complex issues.
“There is virtually no international experience to draw on.
“Further analysis is needed to assess the purposes of a CBDC, the types of solutions that best achieve these purposes and the benefits measured against financial and other costs.”
The report didn’t include details of a plan to introduce a central bank digital currency, however.
Although, the Central Bank of Norway didn’t identify any problems that would rule out the idea.