Norway, one of the world’s most cashless societies, is slated to begin testing various applications for a central bank digital currency, in an effort to further reduce cash transactions.
As first reported by Reuters, Norges Bank has revealed it will move ahead with experimental testing to increase its knowledge of the cryptocurrency sector, and to determine the “purpose and consequences” of creating a CBDC. Norway’s central bank has already spent the previous four years researching the space, but has remained relatively hesitant about digital currencies, despite other countries moving ahead.
Central banks around the globe have been hurrying to introduce digital currencies, in response to a broader movement away from fiat cash. The embrace of a cashless future was spurred by the ongoing rally in major cryptocurrencies such as bitcoin, which has soared in popularity since the beginning of the pandemic.
As of current, approximately 3-4% of all transactions in Norway are conducted via coins or bank notes, making the country one of the most minimal users of cash in the world. In fact, Norway’s cash usage is even lower than neighbouring Sweden’s, which has a rate of around 9%. However, Sweden on the other hand, is among one of the most advanced economies in terms of establishing a CBDC, according to a recent McKinsey Global Payments report.
Despite the optimism for a CBDC, Norges Bank Governor Oystein Olsen said the central bank still has a long way to go before a digital currency enters circulation. “A possible introduction of digital central bank money will still be some way off,” with the latest timeline reflecting “that Norges Bank has so far not seen an immediate need for the introduction of such money,” he explained. Olsen noted that the decision to introduce a CBDC will be contingent on political involvement, and changes to the country’s legislation.
Information for this briefing was found via Reuters and McKinsey & Company. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.