- In the past, Norway tested retail CBDC architectures for cross-border transactions
- The bank assessed the possible effects of the currency on banks, financial stability, and monetary policy.
Norway is the latest to express support for the European Union’s crypto regulation (MiCA), now evaluating the adoption of a central bank digital currency (CBDC). Norges Bank expressed interest in the regulation and the potential adoption of CBDC to strengthen financial stability and improve cross-border payment systems, Cointelegraph reported.
Norway, a member of the European Economic Area (EEA), closely follows EU regulations, including the MiCA regulation. MiCA regulatory framework seeks to bring clearer rules to the crypto market. However, Norges Bank has yet to decide on issuing the digital asset, but it maintains that digital currency is a potential tool for enhancing cross-border payments.
In 2023, Norges Bank reportedly participated in “Project Icebreaker,” a trial aimed at testing new retail CBDC architectures for cross-border transactions. This initiative is part of the bank’s ongoing exploration of digital currencies, even as it remains undecided about whether to proceed with full implementation.
See Related: France Regulator Launches MiCA Licensing Ahead Of EU Peers
Norges Bank Aligns With MiCA
“We have evaluated the necessary characteristics for a CBDC and identified potential applications,” Norges Bank mentioned. “We have also analyzed the impact a CBDC can have on banks, financial stability, and monetary and liquidity policy. Furthermore, we have explored the necessary legislative changes that need to be put in place in order for a CBDC to be introduced.”
One major aspect of the CBDC debate involves privacy issues. While MiCA aims to standardize the crypto market across the EU, it has also raised concerns about potential systemic risks, particularly for stablecoins.
Norway’s stance on MiCA and its cautious consideration of a CBDC highlight a broader trend among central banks globally, seeking to balance innovation with financial stability. The country has aligned with EU policies and is exploring digital currency solutions.
“Among other things, we have established and tested a prototype based on so-called blockchain technology. This is the same technology underlying the most well-known crypto-assets,” Norges Bank added.
