Norway’s Norges Bank might develop “Central Bank Digital Currency”
It is being considered as an alternative of fiat currency. According to them, it can “ensure confidence in money and the monetary system”.
The paper assesses the parameters in creation of central bank digital currency (CBDC). The paper covers the three important aspects where the currency will be useful. Firstly, it will work as a supplement for deposits in the private banks. Secondly, it will also be working like a “legal tender” again as an alternative to the local currency of the country. Thirdly, it will be useful as an independent support system of the online payments.
“A decline in cash usage has prompted us to think about whether at some future date a number of new attributes that are important for ensuring an efficient and robust payment system and confidence in the monetary system will be needed”, as stated by Norges Bank Governor Øystein Olsen.
The paper designed specifically for virtual currencies highlights how this currency can work out as a supplement for fiat currencies to store assets.
Norges Bank has also made it clear in the paper that the introduction of CBDC should not hamper the normal credit lending processes of the banks and other financial institutions. Norges Bank will be ready to provide cash when there is a need of it.
This is just an initial level of analysis for knowing the potential of CBDC. The group working on its development has stated, “It is too early to conclude whether Norges Bank should take the initiative in introducing a CBDC. The impacts of a CBDC – and the socio-economic cost-benefit analysis – will depend on the specific design. The design, in turn, will depend on the purpose of introducing a CBDC.”
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