Norway Central Bank Thinks about Developing Digital CurrencyMay 25, 2018
The Central Bank of Norway, Norges Bank thinks about developing its own digital currency to supplement cash. This is to guarantee confidence in money as well as their monetary system. This was revealed by a working paper yesterday.
The comprehensive report as prepared in detail by a particular working group of Norges Bank tend to investigate the different aspects that they believe must be taken into consideration when evaluating the issuance of Central Bank Digital Currency or CBDC. Authors of the report give emphasis on three potential CBDC applications which might include introduction of credible alternative deposits on private banks and proper legal tender as better supplement to cash and independent back-up solution for electronic systems of payments.
The governor of Norges Bank Oysten Olsen state that cash usage decline has triggered them to think about, sometime in the future some new attributes which are crucial for ensuring robust and efficient payment system as well as trust in the monetary system will be necessary.
The comprehensive report stated that CBDC can provide clients with alternative ways to store their assets. Norges Bank also stated that foundation of CBDC should not interfere with the bank and other known financial institution’s ability to give credit. Reportedly, Norges Bank will continue release cash as long as there are demands for it. This working group has just completed the first phase of potential CBDC. The group also stated that it’s still so early to conclude whether the Norges Bank must take the initiative to introduce CBDC. Impacts of CBDC including socio economic and cost benefit analysis will somewhat depend on particular design. In turn, the design will depend on CBDC introduction.
Some nations in Europe have also started considering issuing digital currency by means of their exclusive central bank. Just like Norway, Riksbank in Sweden is also considering e-krona due to cash circulation decline. These countries are now open about the idea of developing and issuing digital currency.
Cointelegraph reported yesterday that Swiss Federal Council requested a state focusing on state-backed digital currency that examines the opportunities and risks of the introduction. Lower House of Swiss Parliament now needs to decide whether to support the request for research of the Federal Council. In case the proposal gets approved, Swiss Finance Ministry will be conducting the study.