Norway’s central bank, Norges Bank, is expected to make a pivotal decision regarding the implementation of a central bank digital currency (CBDC) by next year, according to Deputy Central Bank Governor Pål Longva.
In an interview with Bloomberg on October 24, Longva confirmed that the bank is progressing steadily toward concluding its recommendation on whether to move forward with developing a digital currency.
Even though other European countries, such as Switzerland, have moved faster in this area, Longva assured that Norway is not lagging behind in its efforts.
“We are in line with many central banks — we are studying complex issues and we have a lot to consider and assess, and there is no urgency as of now,”
Longva stated.
The central bank is currently considering both retail and wholesale versions of the CBDC. A retail CBDC would be available for everyday consumer use, while a wholesale version would facilitate transactions between financial institutions. Longva noted that recent trends indicate many central banks are focusing on the wholesale model due to its potential benefits for the banking system, and this is also the direction Norway is exploring.
However, he cautioned that a retail CBDC could introduce significant challenges, including the need for cooperation with private banks and other stakeholders to ensure a smooth and effective implementation. The complexity of these challenges is still being evaluated.
Norway’s CBDC pilot is already in its fifth phase, according to a press release from the bank in December 2023. This phase will be key to determining whether the country will proceed with a CBDC, which has been in development for over two years now. No definitive timeline has been provided, but a final decision is expected by the end of 2025.
The interest in CBDCs reflects a global trend of central banks modernizing financial systems in response to the growth of digital payments. For instance, the Reserve Bank of Australia (RBA) is prioritizing the development of a wholesale CBDC, which it views as a more evolutionary step with fewer complexities compared to a retail CBDC.
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