Outlining the Norges Bank’s current assessment of a central bank digital currency (CBDC) for real-time payments, Ida Wolden Bache said Norway is already seeing falling levels of cash use and increasing adoption of payment apps tapping bank deposits that may be factors in deciding on such a launch.
But cash serves several useful functions to society that users are not necessarily aware of when choosing payment methods, Wolden Bache continued. These include as a back-up should electronic payments not be available, as “widely accessible” legal tender and as a “credit risk-free alternative to bank deposits.”
As such, the question is not should the Norges Bank introduce a digital currency to work alongside cash, but rather would anything important be lost if it didn’t and cash “died out.”
“Could CBDC provide more than cash can offer, in the form of a greater range of uses and more innovation?” Wolden Bache asked.
There are other factors too, with the deputy governor citing the need to be prepared with a CBDC should the payments system move in a different direction than can be predicted currently – what she called the “precautionary principle.”