Norway’s central bank is in the early stages of researching the issuance of a digital currency.
Appearing at the Norwegian Academy of Science and Letters on 25th April, Jon Nicolaisen, Norges Bank’s deputy governor, spoke in part about the differences between money held in banks today and the proliferation of digital currencies, casting the central bank’s research in this area against the backdrop of a world in which bitcoin and other cryptocurrencies have found broader use.
Particularly attractive for some users, he said, are the peer-to-peer and identity-obfuscating aspects that mirror cash – something that “new payment solutions may be able to offer” in the future.
Nicolaisen went on to say:
“Private digital currencies providing anonymity are already on the market. These currencies can also be used even if banks’ systems fail – as long as the Internet is still functioning.”
It’s these characteristics, he said, that have led Norges Bank to consider new options. Among those possibilities: the issuance of a digital currency through which consumers could hold an account at the central bank. Another proposal, Nicolaisen said, is the introduction of an app that would enable anonymous, cash-like payments.
Norges Bank is far from alone in exploring this area, sparking what Nicolaisen described as a long-term effort to explore which directions the institution might take. A number of central banks worldwide are looking at blockchain as a possible mechanism to issue the currencies.
And, echoing representatives from other central banks, including the Bank of England, Nicolaisen said that a central bank launch of a digital currency could have significant implications for today’s financial system.
“For many consumers, electronic central bank money could provide an alternative to deposit money in a bank, as cash does today. Banks can attract deposits through the interest rates they offer,” he said, adding:
“But their ability to create money and extend credit could nonetheless be affected, especially if this new form of electronic money enters into widespread use.”
Norwegian kroner image via Shutterstock