Norges Bank, the Central Bank of Norway, wants to develop its own digital currency to supplement fiat currency to “ensure confidence in money and the monetary system.”
According to a report by the Norges Bank group, they have been investigating all the factors that need to be considered in the issuance of a central bank digital currency (CBDC). They have found three applications for CDBC, namely:
- Introduction of an alternative to private bank deposits.
- Legal tender supplementing fiat.
- Backup solution for electronic payment systems.
“A decline in cash usage has prompted us to think about whether at some future date a number of new attributes that are important for ensuring an efficient and robust payment system and confidence in the monetary system will be needed,” says Øystein Olsen, Governor of Norges Bank.
So far, only the initial phase of the CBDC research has been completed. The group explained:
“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.”