Ida Wolden Bache stands as the deputy governor of the central bank of Norway, Norges Bank, and spoke at an event on Thursday. Bache described a decline in cash payments within the country, at the same time detailing the finer points regarding central bank digital currencies, or CBDCs.
Highlighting Significantly Low Cash Use
In her speech, Bache highlighted that only 4% of the country is currently leveraging cash to make payments, doing so during the Finance Norway Payment conference.
Bache explained that this share is more or less the same as was recorded in spring, and stands as a substantially lower percentage than what was recorded prior to the COVID-19 pandemic. Bache went as far to claim, as far as the central bank is aware, that this percentage of cash usage is the lowest in the world.
Norway leverage the Kroner as its fiat currency, issued by Norges Bank. As the COVID-19 pandemic raised concerns, countries naturally started to worry about common points of personal contact. One of these common points were physical currencies, as it tends to change hands constantly.
CBDCs Boosted By Pandemic
CBDCs had already been a hot topic for 2020, with the pandemic only streamlining its need. Many nations across the globe have started to test out prospective CBDC projects, with China being the global superpower in the lead.
As always, it’s prudent and amusing to mention the Petro: a CBDC issued out by Venezuela that will forever be known as the first-ever state-owned digital currency, albeit one that holds lackluster success.
Bache highlighted that a new trend, one specific to Norway and its neighboring countries, is the rapid decline of an already low level of cash use. Bache highlighted this after she detailed specific aspects of CBDC projects across the globe.
Many Variables To Consider
Bache isn’t advocating for complete abandonment of cash, however, as the director mentioned, the various qualities only available to physical cash. The most prominent of these qualities is its ability to stay usable even if a digital payment system goes down.
Another key aspect of cash’s strong points is its wide accessibility. As such, Bache stated that some of these aspects will be lost if Norway goes CBDC-exclusive.
Bache thus started to ponder various things. One key question she asked is whether or not something important will die out should cash die out without a CBDC introduced.
She further questioned if a central bank money needs to exist to maintain confidence in the monetary system. Furthermore, she pondered the potential for CBDCs offering more opportunities than physical cash.