(Bloomberg) -- Norges Bank remains on track to finalize a recommendation next year on whether one of the world’s most cashless countries should introduce a central bank digital currency.
Norway’s monetary authority isn’t concerned about getting left behind, even as other wealthy nations like Switzerland push ahead with CBDC plans, Deputy Central Bank Governor Pal Longva said in an interview in Oslo on Tuesday.
While the European Central Bank is also preparing the ground for potentially introducing a digital currency in the coming years, Longva said there’s “no urgency” to accelerate the process in Norway.
“I don’t think we’re falling behind on CBDC efforts,” Longva said. “We are in line with many central banks — we are studying complex issues and we have a lot to consider and assess, and there is no urgency as of now. On the other hand, we should be prepared to move into this space in close collaboration with other banks.”
CBDCs remain a loaded topic, with some critics zeroing in on their potential for government abuse. In the US, presidential contender Donald Trump has said he’d “never allow” a central bank-issued digital dollar, saying it would represent “government tyranny.”
While cash use in Norway fell to the lowest level globally at the onset of the pandemic, it has remained stable recently, with 2% of participants in a Norges Bank survey earlier this year saying they used cash the last time they paid at a physical point of sale.
Norges Bank is looking at both a retail and wholesale version of CBDC at the moment, Longva said. Even so, “lately there is a tendency in many central banks to put increased weight on the study of the wholesale approach, that also goes for Norway,” he added.
A retail version “raises very complex issues which we need to consider and assess,” and would depend on “dialog and cooperation with the private banks and other stakeholders,” Longva said.
Wholesale CBDCs are designed for transactions between banks and the central bank, while a retail version would be used directly by consumers. With almost all global central banks exploring a CBDC, the likelihood that they will issue a wholesale version within the next six years now exceeds the likelihood of opting for a retail CBDC, according to a survey published by the Bank for International Settlements in June.
Longva’s remarks come less than a month before the Nov. 15 deadline for a government task force to submit a report on ensuring safe and simple payments that also includes digital central bank money. The decision on a CBDC also ultimately rests with Norway’s lawmakers.
A similar government inquiry in neighboring Sweden, which was early in starting research on a a central bank digital currency, concluded last year that the largest Nordic country has no need for such an instrument, and that the Riksbank should reconsider its plans for an e-krona.
The Riksbank said in March that it’s continuing work on researching the policy and design issues around creating a CBDC.
--With assistance from Niclas Rolander.
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