Cashless Norway Explores Central Bank Digital Currency

Is Norway, the most cashless society on the planet, ready for a central bank digital currency (CBDC)? The head of the country’s central bank is starting to think so.

That’s according to a report published on Thursday (April 22) by Bloomberg News, which says that Norges Bank Governor Oystein Olsen believes the case for exploring a CBDC is much stronger than it was four years ago. That was when the bank first began researching the issue, remaining agnostic even as other banks pushed ahead. The bank says it plans to take two years to learn more about the subject, testing technical solutions to make sure it has a firm grasp on the “purpose and consequences” of launching a digital currency.

“Central banks globally are racing to respond to widespread cashlessness by developing their own digital currencies, spurred by the embrace of cryptocurrencies such as bitcoin, as well as private initiatives including Diem, which is backed by Facebook Inc,” noted the report.

Less than 4 percent of transactions in Norway are carried out with banknotes and coins, according to Norges Bank, which says this is the lowest cash use in the world. Norway’s neighbors in Sweden are only slightly less cash-adverse, using notes and coins for about 9 percent of transactions. Sweden is also much farther along in developing a CBDC.

“A possible introduction of digital central bank money will still be some way off,” Olsen said. The bank said that its timeline “reflects that Norges Bank has so far not seen an immediate need for the introduction of such money.” Olsen noted that any decision on introducing a CBDC will require new legislation and the political will to make it happen.

But will the rest of the world make the decision for Norway? A report published by Citi this week speaks of an “inflection point in the history of money,” with a new age of digital currency poised to begin. The report states that CBDCs will be a part of that movement, along with cryptocurrencies and stablecoin, with countries embarking on a “space race” in developing them.