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Norges Bank is carefully considering both the benefits and challenges of introducing a CBDC, with a decision expected in 2025.
Key Notes
Norges Bank will make its final recommendation on whether to introduce a central bank digital currency (CBDC) by 2025.Despite global progress on CBDC initiatives, Norges Bank is not in a hurry to catch up with countries like Switzerland and China.Norway is leaning towards wholesale CBDCs due to their benefits for interbank transactions, though the country is still reviewing the complexities of retail CBDCs.As Norway continues its journey towards a possible central bank digital currency (CBDC), the country’s monetary authority Norges Bank has announced that a final recommendation on the matter will be made in 2025. The decision is expected to have significant implications for the European nation.
In an interview with Bloomberg in Oslo, Pål Longva, the Deputy Central Bank Governor said the outcome of the meeting will determine whether Norway will join the growing list of countries like Switzerland and China in embracing CBDCs and exploring their use cases.
No Rush to Catch Up with Global Peers
He disclosed that while these countries are moving forward with their digital currency projects, Norway does not feel pressured to speed up its process. The Deputy Governor emphasized that Norges Bank is carefully studying the complex issues involved in introducing a CBDC and is committed to making a well-informed decision.
“I don’t think we’re falling behind on CBDC efforts. We are in line with many central banks — we are studying complex issues and have a lot to assess, but there is no urgency. On the other hand, we should be prepared to move into this space in close collaboration with other banks,” Longva said.
Longva disclosed that the European nation is looking into both wholesale and retail CBDCs. However, Norway is leaning more towards the wholesale version due to their utility for financial institutions in settling interbank transactions, unlike Retail CBDCs which will be primarily used by consumers for everyday transactions.
“Lately, there is a tendency in many central banks to place increased weight on the study of the wholesale approach, and that also applies to Norway,” Longva told Bloomberg.
He added that the retail CBDC option raises more complex issues, particularly around cooperation with private banks and other stakeholders.
Growing Global Interest in Wholesale CBDCs
Meanwhile, Norway is not the only country leaning toward wholesale CBDCs over retail versions. In September, Australia’s central bank revealed its decision to prioritize wholesale CBDCs, citing their greater economic benefits compared to retail CBDCs.
The Reserve Bank of Australia (RBA) made this announcement during a conference with government officials, where it outlined a three-year digital currency initiative known as Project Acacia. This project, developed in collaboration with the RBA and Treasury, aims to enhance the efficiency, transparency, and resilience of wholesale markets by leveraging tokenized money and new settlement systems.
The initiative will initially focus on domestic opportunities but will eventually explore cross-border applications with other regional central banks.
In addition to Australia, the government of the United Kingdom is also favoring wholesale CBDCs. Last month, the Bank of England (BoE) published a discussion paper titled “The Bank of England’s Approach to Innovation in Money and Payments”, in which it proposed modernizing its Real-Time Gross Settlement (RTGS) system to investigate the potential applications of digital currencies.
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Chimamanda is a crypto enthusiast and experienced writer focusing on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love for travel and food, bringing a fresh and engaging perspective to her work.
