- The Central Bank of Norway concluded that a CBDC is not warranted at this time.
- The Norges Bank stated that people can continue to use the Norwegian payment system since it is secure and efficient.
- Norway has followed in the footsteps of the United States, which has allowed financial institutions to explore tokenization.
Norway’s central bank has stepped back from the digital currency arms race, announcing on Wednesday that it will not proceed with issuing a retail CBDC at this time.
In a decisive report published December 10, Norges Bank argued that the current Norwegian payment system, dominated by the BankAxept and Vipps networks, is sufficiently robust to meet societal needs without state intervention.
However, Bache noted that the bank’s stance may change in the future depending on global developments. Moreover, the Norges Bank noted that its need for a CBDC may change as more global central banks explore the same area.
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“The need for such a currency may, however, change in the future. We will be ready to introduce an efficient and secure payment system. We look forward to cooperating with the financial industry and other central banks on work in this area,” Bache stated.
According to the Norges Bank, its future CBDC design will be in two variants to represent retail and wholesale customers. However, the Norges Bank will currently follow in the footsteps of the United States, which recently banned the creation of the Fed’s CBDC under the GENIUS Act while still allowing broader tokenization work in the financial sector.
Why the Needs May Change Soon for Norway
The need for a CBDC may change in the near term as more global central banks explore the same area amid the mainstream adoption of tokenization. According to data from the Atlantic Council, 137 countries and currency unions, which represent 98% of global gross domestic product (GDP), are exploring the development of a CBDC.
Three countries – Bahamas, Jamaica, and Nigeria – have fully launched their respective CBDCs. China’s digital Yuan (e-CNY) and India’s e-rupee are still in the pilot phase and initial rollout stage.
The recent Norges Bank report noted that the mainstream adoption of tokenization may create both opportunities and challenges for the payment and financial system in the country.
The report acknowledged the importance of collaboration between Nordic and other European central banks to ensure a secure and efficient settlement system in the long term. Moreover, the bank noted that the rising demand for mobile payments has created a new challenge for potential cyberattacks on critical systems.
As such, the bank highlighted that new financial products through blockchain technology, such as stablecoins and crypto assets, could help address some of these issues. However, the bank admitted that the lack of more global CBDCs in operation may cause a vulnerability for a similar product in the country.
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