Norway’s Central Bank to Decide on Digital Currency in 2025

Norges Bank, Norway’s central bank, will make a decision next year on whether to go forward with the introduction of a central bank digital currency (CBDC), says Deputy Central Bank Governor Pal Longva.

Just yesterday, in a sitdown with Bloomberg in Oslo, Longva publicized that Norges Bank is on track to conclude its recommendation regarding introducing a digital currency. Despite the ongoing buzz around CBDCs globally, Longva assured that Norway is not lagging behind, even though other countries like Switzerland have already made strides in this area.

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Norges Bank is gearing up to drop some news on whether they’re rolling out a central bank digital currency (CBDC) next year.

Deputy Governor Pal Longva is hyped, saying they’re not lagging behind while others like Switzerland are… pic.twitter.com/cdOOonWnIl

— Mario Nawfal’s Roundtable (@RoundtableSpace) October 23, 2024

“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,” Longva said, addressing concerns about Norway’s progress compared to other nations.

Retail or Wholesale CBDC, Which?

One very important consideration for Norges Bank is whether to introduce a retail or wholesale CBDC. Whereas a retail CBDC would be for everyday use by the public, a wholesale CBDC would serve for transactions between financial institutions. Longva posited that many central banks are increasingly setting aims on wholesale CBDCs, and Norway is merely tolling the path laid out.

“Many central banks are leaning towards the wholesale approach, and that’s the direction we’re considering too,” Longva explained.

However, the introduction of a retail CBDC is not off the table. Longva pointed out that such a move could bring about several complexities, especially since it would require close collaboration with private banks and other stakeholders. He emphasized that this process would depend on extensive dialogue within the financial ecosystem.

Norway’s Cashless Society

Norway is already one of the most cashless societies in Europe. According to the World Bank, 98% of Norwegians have a debit card, and a 2023 survey by Trading Platforms revealed that over 95% of the population uses mobile payment apps instead of cash.

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From 1 October, all shops in Norway will be forced by law to accept cash payments from customers if the amount does not exceed 20,000 kroner (about A$2,750 – US$1,885)

Although there is an argument that businesses should be free to… pic.twitter.com/Q4qdUnZEqf

— Craig Kelly (@craigkellyXXX) October 3, 2024

Despite this, cash use in Norway has remained relatively stable. A survey by Norges Bank earlier this year uncovered that 2% of respondents used cash during their last in-store purchase, hinting that although cash is plummetting, it’s not entirely disappearing.

Norges Bank has been working on its CBDC pilot for the past two years and is currently in the fifth phase of the project. The likely results from this phase will determine whether the central bank proceeds with introducing a digital currency. Per a press release from December 18, last year, the final decision is expected by the end of 2025.

Really good news: in Norway, the right to pay cash has been enshrined in law, as of Oct 1st. Retail will no longer be able to refuse cash for payments up to $2000.

Meanwhile, in other EU countries you're _prohibited_ from accepting that much cash!https://t.co/C259G9BN3q

— Peter Todd (@peterktodd) October 15, 2024

At any rate, the central bank is meticulously ensuring that all the necessary factors are weighed before making a move. As Longva reassured, “We’re not in a hurry, but we are being thorough.”

It seems that the next year will be pivotal for Norway’s digital currency journey, with the potential to shape the future of its financial system.