Norway, one of the world’s most prosperous countries, takes steps toward becoming the first cashless society as Norges Bank considers the adoption of a central bank digital currency (CBDC).
The country’s central bank Norges stated that as citizens move farther away from physical forms of money, it must consider new efficient and robust options including digital currencies, in a report released Wednesday.
The adoption of a CBDC by Norway would be a landmark step towards cashless economies and setting regulatory standards for other nations to adopt centralized digital currencies, experts say.
While the central bank is considering introducing the CBDC as a supplement, the bank does not intend to remove cash as long as there is significant demand.
The Norges Bank stated in the report:
“Norges Bank will continue to issue cash as long as there is demand for it. But when cash usage declines, a CBDC can be an alternative to deposit money. The primary purpose of a CBDC is to ensure confidence in money and the monetary system.”
CBDCs merit use as an independent backup solution for electronic payment systems. They can ensure a public credit risk-free alternative to deposits in private banks in addition to cash, and serve as suitable legal tender.
The report underscored two significant requirements if Norway was to adopt a CBDC.
First, the central bank would need to provide oversight and control the system, similar to the way it oversees cash today. The central bank would be responsible for the core infrastructure, but would not need to manage the payment services which could be built on top, the report stated.
Second, there should be sufficient demand and familiarity from the general public to use CBDC.