Norway’s financial task force has warned against the hasty introduction of a central bank digital currency (CBDC). The panel insists that cash is still important for accessible, reliable, and secure payments. It recommends the establishment of a comprehensive regulatory framework to set the groundwork for a safer future CBDC rollout.
The Norwegian expert panel emphasizes that lawmakers should focus on balancing stability with innovation in the financial sector. According to Foresight News, Norway is one of the countries in the world with the lowest cash usage. Although the panel does not advocate the adoption of a CBDC, it expresses the need for the country to be prepared for such an opportunity in the future.
Norway hits the brakes on digital currency adoption plans
Norway can wait with digital central bank money, a committee says https://t.co/4cpSRvbtiF
— Bloomberg (@business) November 15, 2024
A Bloomberg report shared on November 15th recommended that Norwegian politicians should slow down on the adoption of the CBDC. Through a report submitted to Trygve Slagsvold Vedum, Norway’s Finance Minister, the panel urged policymakers to consider the ‘regulatory first’ approach.
The report mentions that despite Norway being among the most cashless societies in Europe, cash payments are still more secure and accessible to all. However, a 2023 survey by the Norges Bank revealed that only 2% of in-person payments were made in cash. Therefore, a CBDC may be a relevant instrument in the future. According to the Norwegian central bank report, however, more people used cards and giro payments compared to cash.
Notably, the number of card payments was significantly higher than giro payments, as per the Norges Bank report. The report noted that although giro payments were far fewer than card payments, their value was far higher than the value of card payments. Essentially, the average value of card payments was NOK 383 while the average value of giro payments was NOK 24 051. Direct debits were the third most used transfer service for retail customers according to the report.
The financial committee’s cautious approach to the introduction and adoption of a CBDC reflected a wider trend of carefully evaluating and strategically planning rapidly evolving financial technologies, wrote Foresight News.
Norway aligns with Sweden’s strategic direction in CBDC adoption
A commission of inquiry appointed by the Swedish government also had the same stance as the recommendation made by Norway’s task force. The commission in Sweden also concluded that the transition towards the e-krona was not a priority. They cautioned the Swedish Riksbank to re-examine the CBDC adoption plans.
The Bank of Norway is set to deliver its own plans in 2025 regarding the introduction of a CBDC.
Pal Longva, deputy governor at Norges Bank, said the bank was evaluating CBDC’s retail and wholesale models, although the CBDC’s wholesale approach was already attracting global attention for its role in interbank transactions.
Sweden’s Riksbank’s latest report stressed the need for extensive regulatory and technical development to ensure the security of offline payments with e-krona. The Swedish central bank cautioned about the potential risks associated with unsynchronized CBDC data in offline payments. The bank addressed liquidity risk concerns stemming from wallets and intermediary nodes that facilitate connections between online and offline wallets.
While the Riksbank had recently concluded its e-krona solution pilot, decisions regarding the issuance of the digital currency or the associated technologies were yet to be made.
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