Central Bank of Norway Makes Progress in its CBDC Efforts
- The Central Bank of Norway announced its plans to explore CBDCs last year, making it one of the European countries to follow the CBDC route.
- According to the International Monetary Fund, half of the global central banks are exploring CBDCs.
- So far, Nigeria and the Bahamas are the two countries to have rolled out a CBDC, according to the IMF.
Norway’s central bank has made considerable progress toward promoting digital currencies with the release of the open source code for the country’s central bank digital currency (CBDC) sandbox. According to Nahmii, the Norges Bank’s designated CBDC operator, the sandbox, which is viewable on GitHub, was developed to offer a user experience for interfacing with the test network, facilitating functions like transferring ERC-20 tokens, burning, and minting.
Norway has one of the fastest-growing crypto markets in Europe, as the country legalizes crypto trading. The country, known for its cashless policy, announced its plans to delve into the CBDC market last year. According to Nahmii, the latest release of the code is exclusively accessible to people with the necessary credentials. It also does not support the Metamask wallet.
The Norges Bank sandbox contains a unique frontend, the requisite smart contracts, access controls, as well as network monitoring tools. In a blog post it released, Nahmii noted that the front end also displays a filterable overview of network transactions. It wrote,
Written in React, the sandbox frontend is designed to offer a clear and intuitive interface for interacting with the test network. Role-based access control is in place for important functions like minting and burning tokens. Please note that this version of the code is only suitable for keystore files and does not support MetaMask, this is by design.
It’s noteworthy that Norway’s CBDC prototype infrastructure was created using Ethereum. Norway’s central bank spoke candidly about Ethereum in May when it shed light on its CBDC efforts. The bank remarked that the Ethereum technology would provide a key structure for the production, transmission, and destruction of digital central bank money.
Norway joins the growing number of European countries in exploring a CBDC. According to the International Monetary Fund, over 97 countries, which is more than half of the global central banks, are exploring CBDCs. The IMF added that only Nigeria and the Bahamas have successfully rolled out CBDC projects. However, the numbers are expected to increase in the coming years.
Central banks are exploring digital currencies for different reasons. Some countries see CBDCs as a way of tapping into the growing digital payment system. But others believe a CBDC would guarantee control of the digital market in their respective countries.
Speaking of Norway’s plans for a CBDC, the Norges Bank governor remarked that
Norges Bank’s goal is to have a secure, effective, and attractive NOK payment system – today and in the future.
A few of Norway’s European neighbors have joined the CBDC bandwagon, with France beginning its CBDC trials in January and Sweden finishing the second stage in February. The Netherlands first set the stage in 2020, sparking an increased awareness about digital currencies.