Norway's central bank, Norges Bank (NB), is making significant progress in the development of its own digital currency. After two years of research and four phases of testing, NB is now entering the fifth and final phase to assess the feasibility and implications of introducing a Central Bank Digital Currency (CBDC).
The previous phases involved evaluating the technical solutions, analyzing the scenarios for integrating CBDC into the payment system, assessing its impact on liquidity management and monetary policy, and discussing the necessary legislative amendments required for the implementation of a state digital currency.
In this crucial fifth phase, NB will closely examine the potential benefits and consequences of introducing a CBDC. The central bank also plans to explore new forms of transactions using the digital krone, collaborating with interested parties, other central banks, and international organizations.
Upon completing this final stage, Norway's central bank will decide whether launching a digital krone is a viable option. If the decision is affirmative, they will begin defining the characteristics of the future CBDC.
Ida Wolden Bache, NB's executive, stated, "Norway's current payment system is functioning well, so there is no rush to introduce a state stablecoin. However, considering the decreasing demand for cash, the emergence of new asset forms and payment platforms, and research by other central banks on CBDC, the introduction of a digital krone is becoming increasingly relevant."
Last year, Norges Bank initiated a sandbox for testing the state stablecoin to evaluate how it would maintain the stability of the Norwegian krone's exchange rate and the country's financial system.