KNOWLEDGE CENTRE: A report presenting the results of an in-depth investigation by Norway’s central bank into the potential of a central bank-issued digital currency is now available to download from the NFC World Knowledge Centre.
Norges Bank Papers — Central Bank Digital Currencies has been produced by a working group set up to examine the aspects that should be taken into account in assessing whether Norges Bank should issue a central bank digital currency (CBDC).
“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,” the authors explain.
“If the answer is yes, a CBDC may be an appropriate measure for remedying weaknesses that may otherwise arise.”
The report starts by asking why a CBDC might be desirable, and how it is positioned in the money landscape. Desired attributes of the payment system, attributes of cash, and comparisons with a CBDC are explored.
The authors then go on to look at the primary models for CBDCs, including the account-based model, the value-based model, and hybrid variants — including models based on distributed ledger technology.
The 55-page report then explores the central bank’s role, public demand for a CBDC, and the consequences for banks and the payment system, financial stability and monetary policy.
Legal matters are also identified and examined, including the regulatory framework, consumer protection and competition issues, responsibility for customer due diligence and how the EU’s Settlement Finality Directive might apply to a CBDC.