Norway’s digital currency initiative raises privacy issues
Currently, the test network for the Norwegian CBDC employs a private version of the corporate blockchain Hyperledger Besu rather than the public Ethereum environment.
As the rush to test and adopt central bank digital currencies (CBDCs) quickens daily, the Scandinavian country is taking a proactive approach to its own national digital currency. In fact, it was among the first nations in 2016 to initiate work on a CBDC.
In recent years, growth in cashless payment systems and concerns about illegitimate cash transactions have caused several Norwegian banks to eliminate cash choices entirely.
In 2016, Trond Bentestuen, an official at the large Norwegian bank DNB at the time, recommended eliminating cash as a method of payment in Norway.
“There are around 50 billion Norwegian kroner in circulation today, but the Norges Bank can only account for 40 percent of their usage. This suggests that sixty percent of money consumption is uncontrollable.”
A year before, another prominent Norwegian bank, Nordea, had declined to take cash, leaving just one branch at Oslo Central Station to continue processing cash.
This feeling coincided with Bitcoin fever, as DNB permitted its clients to purchase BTC through its mobile app, local courts ordered that convicted drug traffickers pay their penalties in cryptocurrency, and local publications extensively explored digital asset investments.
Torbjrn Haegeland, executive director for financial stability at Norges Bank, Norway’s central bank, highlighted the project’s objective to replace cash in the nation last year:
“Given this context, the fall in cash use and other structural changes in the payment system are crucial project drivers.”
The trial phase of the Norwegian CBDC will run until June 2023, at which point the central bank will propose whether a prototype should be implemented.