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With the rise of a modern financial economy, the use of cash has declined over time, and people all over the world have increasingly begun to accept digital currency. Surprisingly, Norway has the lowest physical currency usage in the world, with cash accounting for less than 4% of total spending in the country last autumn. The same has compelled authorities in that country to investigate digital central bank money and promote the development of cryptocurrencies.
In a recent interview, Norges Bank Deputy Governor Ida Wolden Bache emphasised the country’s growing interest in cryptocurrencies. She, on the other hand, said,
“I think it is unlikely that cryptocurrencies will make banks and Norwegian kroner redundant in the first place, but the financial system will change.”
The Norges Bank is also currently experimenting with its native CBDC and the testing phase is set to go on for the next two years. The minister went on to add,
“A more radical scenario is that cryptocurrencies that are not linked to kroner will have a greater place in the monetary system.”
She pointed out that if Bitcoin became more dominant and prevalent in the Norwegian landscape, the entire system would subject itself to transformation. She said,
“We can imagine an intermediate solution where the state continues to spend kroner, while the private sector prefers one or more cryptocurrencies. If it is to happen on a large scale, an infrastructure is required so that the money can be used in more places than today.”
Bache, on the other hand, claimed that the full abolition of the Norwegian kroner was impossible, citing the difficulty of accepting taxation and other payments in a currency other than kroner. Two other problems were the lack of a standard unit of measurement and the volatility of exchange rates.
For a long time, the people of Norway have been drawn to cryptocurrencies. Sveinung Rotevatn, Norway’s Minister of Climate and Environment, recently announced that he owns Bitcoin and described the flagship cryptocurrency as a “well-suited store of value.” He justified his actions by saying,
“What might make Bitcoin so exciting is that it has some of the same properties. You can’t suddenly discover a ton of Bitcoin somewhere, giving one country huge reserves. It’s spread evenly, it grows slowly, but steadily, and has a finite supply… Therefore, it’s theoretically well-suited as a store of value.”
Øystein Stray Spetalen, a Norwegian billionaire, has also recently joined the Bitcoin group. This move was unexpected given Spetalen’s previous use of the word “nonsense” to describe Bitcoin. The billionaire confirmed in late March that he had changed his mind.
Earlier that month, Aker, a 180-year-old Norwegian firm, announced the acquisition of $58 million in Bitcoin.