Norway’s central bank digital currency

Norway’s central bank – Norges Bank – recently hit a major milestone in its digital currency development efforts by releasing the open source code for the country’s CBDC sandbox based on the Ethereum technology.

Key facts

  • Norway’s CBDC sandbox, which is accessible on GitHub, was created to provide user interface (UI) for engaging with the test network.
  • It has features like minting, burning and transferring ERC-20 tokens.
  • The current version of the open code is only accessible to people with necessary credentials.
  • It does not support popular Ethereum wallet Meta Mask.
  • The second phase of the project would involve making the source code accessible to the public.
  • The sandbox has a unique frontend, necessary smart contracts and access controls and network monitoring tools such as BlockScout and Grafana.
  • The frontend displays a filterable overview of the network transactions.
  • The usage of Ethereum cryptocurrency system provided the basic infrastructure required for the creation, transfer and destruction of digital central bank money (DSP).
  • In November last year, the Norges Bank released a working paper referring to possible CBDC designs, including those based on blockchains like Ethereum, Bitcoin and Bitcoin SV.
  • One of the key issues faced by the bank was the interoperability while considering various technical solutions.
  • The main objective of Norges Bank’s current testing is to study whether DSP is required to ensure that the payment system in Norwegian kroner is secure, efficient and attractive for the local population.

CBDCs

The Central Bank Digital Currencies (CBDCs) are an electronic form of central bank-backed fiat money. They work based on blockchain networks. However, they do not need to be on a blockchain. According to the International Monetary Fund (IMF), 97 countries or more than 50 per cent of all global central banks are developing CBDCs. Presently, only Nigeria and The Bahamans have fully launched the CBDCs.

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