The Central Bank of Norway, Norges Bank recently confirmed the plans of developing own digital currency. The source reported that the new currency will be a supplement to cash which will have the main aim of ensuring confidence in money and the monetary system.
Norges Bank working group has been conducting a study in order to investigate all the necessary aspects that are to be considered while evaluating the process of issuing the new the central bank digital currency. The new digital currency (CBDC) is expected to have 3 main possible applications which include:
Reliable alternative to deposits in private banks will be introduced,
The new currency will be a suitable legal tender as a supplement to cash,
It will also be an independent backup solution for electronic payment systems.
Norges Bank Governor, Øystein Olsen stated that the recent trend of declining usage of cash in the world was the main reason they started thinking about the future solutions for “efficient and robust payment system and confidence in the monetary system”.
The source also states that Norges bank claims that the foundation of a CBDC will not be interfering with their as well as any other financial institutions’ ability to provide credit and that they will continue to issue cash as long as there is demand for it.
The initial phase of the study by the working group is currently completed. As a result of this phase, the group released the initial summary that “it is too early to conclude whether Norges Bank should take the initiative in introducing a CBDC. The impacts of a CBDC and the socio-economic cost-benefit analysis will depend on the specific design. The design, in turn, will depend on the purpose of introducing a CBDC.”