While cash usage has declined in Norway since the COVID-19 outbreak, the Deputy governor at Norway’s central bank says there is no urgent need to launch a CBDC.
November 9, 2020 | AtoZ Markets – The decline in the popularity of cash does not justify a complete and urgent transition to central bank digital currencies (CBDC). This was stated by the deputy head of the Norwegian bank Ayda Walden Bache.
She estimates that only 4% of payments are made in cash. Despite the low demand, they play an important role in society as they remain a reserve and legal means of payment.
“The question is whether something important will be lost if cash disappears and we do not introduce CBDC,” Bache said.
Norway’s stance on CBDC launch
A central bank spokesperson said the digital currency implementation has significant implications, so the central bank’s decision “must be well substantiated.” Bache also asks to take into account the “structural changes” of the payment infrastructure of banks and the challenges of “other forms of money”, for example, the stablecoin Libra.
“We need to understand the impact these changes will have on competition, contingency management and payment system governance at the national level,” Bache said.
The Norwegian regulator has been thinking about creating its own digital currency in 2018. At that time, three possible scenarios for the use of CBDC were studied: as an alternative to deposits, a legal addition to cash, and an independent reserve.
Recall that representatives of BIS and several central banks ruled out the complete anonymity of CBDC. This position drew criticism from the expert community.
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