Norwegian Central Bank: few cash payments, no rush for a CBDC

Cash usage has further decreased in Norway since the beginning of the pandemic, but physical currencies have advantages that CBDCs currently lack.

Speaking at an event on Thursday, Ida Wolden Bache, deputy governor of the Norwegian central bank, described a decline in cash payments while discussing CBDCs.

During her speech at the Finance Norway’s Payments conference, Bache said:

„Only 4% of payments are currently made in cash. This percentage is roughly the same as last spring, and significantly lower than before the pandemic. As far as we know, the share of cash payments is lower in Norway than in any other country.“

Norway uses the krona issued by Norges Bank, the country’s central bank. After the COVID-19 pandemic broke out across Europe in March, moments of physical contact became a potential source of contagion, including the exchange of crypto revolt currencies, which are constantly changing hands.

CBDCs were also much debated in 2020. A large number of countries around the world are studying how to issue such a digital asset, and China seems to be ahead of everyone else.

After describing in detail the various aspects of CBDCs worldwide, Bache said that „a specific trend in Norway and some of our neighbouring countries is the low use of cash„.

The central bank manager mentioned the qualities of cash in his speech. The main advantage is that it remains accessible even when, for example, digital payment systems go offline: „Cash is a widely accessible means of payment“.

Bache then asked himself:

„The question we have to ask ourselves is: would we lose something if cash was no longer used and we did not introduce a CBDC? Is money issued by the central bank crucial to confidence in the monetary system? Could the CBDC provide more utility than cash, from the point of view of a greater range of uses and greater innovation?“

Bache also spoke specifically about CBDCs in Norway, arguing that „the prospect of introducing a CBDC is still a long way off“:

„The lack of necessity reflects our point of view so far: there is no urgency to issue a CBDC. The introduction of a CBDC could have considerable consequences in several areas. Our decision must be well informed“.

Nevertheless, the Norwegian central bank continues to study digital currencies. Furthermore, on 5 November, Brazil’s Minister of Economy confirmed that the country intends to issue a CBDC in the future.