Norway to start testing state-owned cryptocurrency

The State Bank of Norway is planning to test a single state cryptocurrency, a procedure that will allow to evaluate cryptocurrency technologies and related economic challenges. The Norges Bank, the country’s central bank, will also determine the extent to which CBDC (central bank digital currency) will help ensure the stability of the Norwegian krone and the financial system as a whole. The central bank of Norway has to conclude whether the state-owned cryptocurrency will ensure the security and efficiency of the Norwegian krone payment system for the country’s citizens.

«Cash plays an important role in the national payment system and contributes to the competition of payment solutions. However, their use is declining. The digital krone can complement cash and provide competition. It will allow maintaining national control over the payment system, guaranteeing the security of payments in Norwegian kroner, and not depending on foreign financial infrastructure providers, including cryptocurrencies and stablecoins,» the Norwegian Central Bank said in a statement.

Various financial institutions and companies can take part in the testing. In addition, government officials plan to organize hackathons so that everyone can get acquainted with the digital krone. The testing is expected to be completed by the summer of 2023. It is interesting to note that during the first stage of testing, CBDC will be built on Ethereum, and digital kroner will be issued in the form of ERC-20 tokens.

It is worth noting that Norway is not a member of the European Union, but it carries out international financial transactions in the European Economic Area. Recently, the European Parliament announced the conditions for launching its own cryptocurrency. In turn, the United States is exploring the introduction of the digital dollar into public circulation.