Norway focuses on the experiences of central banks' cryptocurrencies

 

Norway 

focuses on the experiences of

 central banks' cryptocurrencies

Norges Bank, Norway's banking regulator, announced the completion of

the fourth round of CBDC digital currency studies.

However

recent results have reduced enthusiasm

 for the central bank's digital currency issuance for retail use.

Norgis Bank reported that

 the likelihood of experimenting with central retail banks' cryptocurrencies

 may be higher based on the maturity of the local payment ecosystem.

The report indicates that token deposits can operate similar to

the central bank's digital currency for retail use

and future experiences will focus on this model.

The central bank added that it would place greater emphasis on central banks'

wholesale cryptocurrencies to explore inter

bank settlements using symbolic deposits.

However

After four rounds of testing, Norges Bank remains undecided about 

the potential launch of the central bank's digital currency

 but hopes to gain more clarity by completing Phase 5.

The fifth round of

 cryptocurrency studies of the central bank

which will run until 2025, focuses on technical standards 

and legal requirements for the introduction of 

the central bank's wholesale cryptocurrencies into the economy.

Phase 5 has made further progress in the Central Bank's cryptocurrency studies

It included exploring the launch plan and focusing on use cases in 

the settlement of symbolic securities and deposits.

The Governor of the Central Bank of Norway, Ida Walden Bash, stated that 

the Central Bank's digital currency valuation raises complex issues

Norway's current payment system was working well

and therefore we must not rush forward unjustifiably.

Despite this cautious approach

The central bank notes that macroeconomic sentiment changes

 are the main reason for continuing the experiences of 

central banks' cryptocurrencies.

The report states some conditions that must be met before

 the banking regulator begins issuing cryptocurrencies to central banks

including widespread reliance on 

digital assets and stable currencies.

Other factors that may influence the central bank's decision to float central

banks' cryptocurrencies include the possibility of BigTech companies controlling 

the domestic financing system, the material risks of currency replacement

or the likelihood of Norway adopting the proposed digital euro.

Thus

the provision of cryptocurrencies to central banks is more important 

now than at the beginning of the Bank's research on this subject in 2016.

Early 2023

Norgis Bank participated in a joint study with the Bank for International

 Settlements (BIS) and central banks in Sweden to explore the concept of

 the Central Bank's digital currency (CBDC)

 with cross-border payment functions.

The "Icebreaker" 

project was piloted and showed great promise in creating a new system that 

allows central banks to maintain digital currencies in their financial 

systems without the usual counterparty risk and settlement.

Experience has achieved excellent results by stripping 

financial transactions to their constituent components

The transaction was divided into small

enforceable parts and immediately settled. Thus, higher speed 

and efficiency is achieved in cross-border payments.

This experience is an important step in developing central banks'

 digital currencies and enhances confidence in their ability to 

achieve financial settlements in safe and effective ways.

The "Icebreaker" project is an innovative initiative that opens the door to 

new and promising possibilities for the global payment system.