As a seasoned analyst with years of experience observing central banks and their digital currency endeavors, I find Norway’s cautious yet methodical approach to adopting a CBDC intriguing. The Deputy Governor’s stance that they are not rushing to catch up with global peers is reminiscent of the Norwegian fjords taking millennia to carve themselves into the landscape – slow and steady wins the race, after all!
Moving forward with the prospect of a national digital currency, Norway’s central banking institution, Norges Bank, has declared that they will deliver their conclusive advice on this topic by the year 2025. This decision could carry substantial consequences for Norway, being a key player in Europe.
During a talk with Bloomberg in Oslo, Pal Longva, the Vice-Governor of the Central Bank, noted that the results of the upcoming meeting could influence Norway’s decision to follow nations such as Switzerland and China in investigating and potentially adopting Central Bank Digital Currencies (CBDCs).
No Rush to Catch Up with Global Peers
It was revealed that as other nations progress with their digital currency initiatives, Norway remains undisturbed by the need for haste. The Deputy Governor underscored the meticulous examination Norges Bank is conducting on the intricate matters surrounding the adoption of Central Bank Digital Currency (CBDC), and its dedication to making a prudent decision based on thorough understanding.
Longva stated that while we’re keeping pace with numerous central banks regarding Central Bank Digital Currencies (CBDCs), we’re still delving into intricate matters and assessing a lot. However, there’s no immediate need for action. Yet, it’s crucial that we stay ready to enter this sector in close partnership with other financial institutions.
It’s been revealed that a European country is considering both types of central bank digital currencies (CBDCs) – those intended for wholesale and retail use. Interestingly, Norway seems to favor the wholesale variant over the retail one because it offers significant advantages in facilitating financial institution transactions such as interbank settlements, whereas retail CBDCs will mainly serve consumers for their daily transactions.
Recently, a growing number of central banks are focusing more on examining the wholesale perspective, and this trend includes Norway as well, according to Longva’s statement to 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
Additionally, it’s worth noting that Norway isn’t alone in favoring comprehensive CBDCs over retail ones. In fact, Australia’s central bank has made a commitment to emphasize wholesale CBDCs, stating that they offer more significant economic advantages than their retail counterparts, as seen in the announcement made in September.
During a meeting with government representatives, the Reserve Bank of Australia (RBA) unveiled its plan for Project Acacia – a three-year initiative focusing on digital currency. Collaborating with the RBA and the Treasury, this project seeks to boost the efficiency, transparency, and robustness of wholesale markets by utilizing tokenized money and innovative settlement systems.
At first, the project will mainly target domestic possibilities. However, it plans to expand its horizons later on, considering cross-border collaborations with central banks from other regions as well.
Beyond Australia, the U.K. government is also leaning towards adopting retail Central Bank Digital Currencies (CBDCs). Last month, the Bank of England released a paper titled “The Bank of England’s Approach to Innovation in Money and Payments”, outlining their plans to upgrade their Real-Time Gross Settlement (RTGS) system to explore the possibilities of digital currencies.
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2024-10-23 13:42