The Norwegian central bank stated that the time has come to take the next step in considering the groundwork for a digital currency. Norway is the country with the least use of cash in any form worldwide. After previously appearing less enthusiastic about digital currencies than its counterparts, Øystein Olsen, the bank's governor, said the case for considering their feasibility has "strengthened" now. In a report published Thursday, it was mentioned that the bank plans to spend the next two years building its knowledge in this field and conducting "experimental tests of technical solutions" to ensure it understands the "purpose and results" that would arise from introducing a central bank digital currency. The bank has already spent four years on initial research but has remained neutral on the subject while others have moved forward.
Central banks worldwide are racing to respond to the widespread abandonment of cash by developing their own digital currencies, driven by the rise of cryptocurrencies like Bitcoin, as well as private initiatives including Diem backed by Facebook.
Digital Ambitions
According to the central bank, only 3-4% of transactions in Norway involve cash, the lowest level of cash usage in the world, while the rate is 9% in neighboring Sweden, which is among the most advanced countries in developing a central bank digital currency, according to a McKinsey report on global payments.
Olsen stated, "The issue of introducing a central bank digital currency will remain somewhat potential." He added that the timeline published on Thursday "reflects that the Norwegian central bank has not yet seen an immediate need to introduce such currencies." Olsen also clarified that any decision regarding the introduction of a central bank digital currency would require political involvement and potential changes in Norwegian legislation.
Meanwhile, Sweden may have a central bank digital currency within five years, according to Swedish central bank governor Stefan Ingves recently. However, Sweden has been inclined to postpone its timeline for the central bank digital currency, recently admitting that the task is more complicated and takes longer than initially expected. The Norwegian central bank will spend the next two years testing various models for central bank digital currencies before deciding on the version it will adopt in its pilot project.
