Cash use has declined in Norway since the beginning of the COVID-19 pandemic, but physical money has qualities that CBDCs do not.
At an event on Thursday, Ida Wolden Bache, Deputy Governor of the Central Bank of Norway, described a decline in cash payments while speaking about the Central Bank’s Digital Currencies, or CBDCs.
„Only 4% of payments are now made in cash,“ Bache said in her speech at Finance Norway’s payments conference, „This proportion is approximately the same as in the spring and considerably lower than before the pandemic,“ she added. „As far as we know, the proportion of cash payments is lower in Norway than in any other country.
Norway uses the Norwegian krone or kroner, the currency issued by the country’s central bank, Norges Bank. After concerns about COVID-19 arose in March, common points of personal contact logically became a concern for countries. These include physical currencies, which are constantly changing hands.
CBDCs have also emerged as a very relevant issue in 2020. Many nations in the world will be bringing out such a digital asset, with China boasting evidence of its asset.
„A trend specific to Norway and some of our neighbouring countries is the low and declining level of cash use,“ Bache said after detailing several aspects of the global CBDC scene.
The central bank’s monetary policy director mentioned the outstanding qualities available with cash. Cash remains available if digital payment systems fail, for example. „Cash is the legal tender that is widely available,“ she said. The country could lose some of these aspects if it goes completely digital with a CBDC.
„The question is whether anything important will be lost if the cash runs out and we don’t introduce a CBDC. Is central bank money crucial to confidence in the monetary system? Could a CBDC provide more than cash can offer, in the form of a greater variety of uses and more innovation? „
Bache also referred to a number of other points to consider when it comes to Norway’s launch of a CBDC. „The possible introduction of a CBDC is still a long way off,“ she said, adding
„The lack of urgency reflects our view so far that there is no acute need to introduce a CBDC. The introduction of a CDDC could have considerable consequences in a number of areas. Our decision must be well-founded.“
In terms of progress, the Norwegian central bank is continuing to study CDBs. Brazil’s finance minister confirmed yesterday that a CDB is being sought for the country.