The Norges Bank, Norway’s Central Bank and financial institution is stepping towards developing its own cryptocurrency in future. On 18th may, the work paper reported that its cryptocurrency ensures a confident and secured monetary system.
According to the Norges Bank’s work paper, the central bank of Norway might develop its own cryptocurrency called by CBDC (Central Bank Digital Currencies). Since, the future cryptocurrency is measured as an alternate of fiat currency. As it ‘ensure confidence in money and the monetary system’.
The paperwork assisted by Norges Bank group, investigation aspect while measuring the issuance of a CBDC must be considered. However, the authors highlight three CBDC applications.
- the introduction of a reliable alternative to deposits in private banks,
- a suitable legal tender as a supplement to cash
- an independent backup solution for electronic payment systems
Øystein Olsen, Norges Bank Governor stated:
“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”.
However, CBDC will be providing customers to store assets in many other ways. The bank reports, the CBDC foundation must not interfere with the ability to provide credit for bank and other financial institutions. However, as long as there is a demand, Norges Bank issues the cash. As such, only initial part of CBDC studying has been completing by the working group.
“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”.
Similarly, Europe has also started to issue cryptocurrency through central bank. In addition, The Federal Council of Switzerland government has requested legislators commission a study on the benefits and risks of its new state-backed cryptocurrency: ‘e-franc’.
The council stated:
“The Federal Council is aware of the major challenges, both legal and monetary, which would be accompanied by the use of an e-franc. It asks that the proposal be adopting to examine the risks and opportunities of an e-franc. Since to clarify the legal, economic and financial aspects of the e-franc”.
At present, the decision has to be taken by lower house of Swiss parliament whether to support the council’s request. Accordingly, the study subject will be held by Swiss Finance Ministry.