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Only 4% of Norway uses cash as country evaluates CBDC, Norges Bank exec says

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Speaking at an event on Thursday, Ida Wolden Bache, deputy governor at Norway’s central bank, described a decline in cash payments while elaborating on Central Bank Digital Currencies, or CBDCs. 

“Only 4% of payments are now made using cash,” Bache said in her speech during Finance Norway’s Payments conference. “This share is approximately the same as in spring, and considerably lower than before the pandemic,” she added. “To our knowledge, the share of cash payments is lower in Norway than in any other country.”

Norway uses the kroner, the currency issued by Norges Bank, the country’s central bank. After COVID-19 concerns arose in March, common points of personal contact logically became worrisome for countries. Those included physical currencies, which change hands constantly. 

CBDCs have also arisen as a hot topic in 2020. A large number of the world’s nations to put out such a digital asset, with China boasting of testing its asset. 

“A trend specific to Norway and some of our neighbouring countries is the low and falling level of cash use,” Bache said after detailing various aspects of the global CBDC scene. 

The central bank monetary policy director mentioned salient qualities available in cash. Cash remains available if digital payment systems go down for example. “Cash is legal tender that is widely accessible,” she said. The country might lose some of these aspects if it goes fully digital with a CBDC.

Bache pondered: 

“The question is whether something important will be lost if cash dies out and we do not introduce CBDC? Is central bank money crucial to confidence in the monetary system? Could CBDC provide more than cash can offer, in the form of a greater range of uses and more innovation?”

Bache also touched on an array of other points of consideration when it comes to Norway launching a CBDC. “The prospective introduction of a CBDC is still some way off,” she said, adding:

“The lack of urgency reflects our view so far that there is no acute need to introduce a CBDC. The introduction of a CBDC could have considerable consequences in a number of areas. Our decision must be well-informed.”

As far as progress goes, Norway’s central bank continues studying CBDCs. Brazil’s economy minister confirmed the country’s pursuit of a CBDC yesterday. 



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Regulation

New York authorizes first Yen stablecoin operator in the US

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New York has given the first authorization to a stablecoin backed by the Japanese Yen to operate in the U.S.

Per a Dec. 29 announcement, the New York Department of Financial Services has granted Japanese firm GMO-Z.com a charter to handle U.S.D. and Yen-backed stablecoins in New York. 

Given New York’s status as a global center, the NYDFS is the most prominent state financial regulator in the U.S. It is also one of the most aggressive. A pass to operate in New York often opens up the rest of the country. 

GMO’s charter is as a limited liability trust company rather than a full bank, the principle difference being in authorization to handle deposits. While a stablecoin operator typically needs the ability to hold reserves of the pegged asset, GMO’s charter limits its rights to hold other kinds of deposits not central to its ability “to issue, administer, and redeem” its stablecoins. 

The right to issue such non-depository charters has been a bone of contention between state regulators like the NYDFS and national banking regulators in the U.S. 

GMO president and CEO Ken Nakamura said: “We’re breaking ground with our move to issue the first regulated JPY-pegged stablecoin, which many see as a safe haven asset.” 

The NYDFS recently made changes to its famous BitLicense, including a conditional format that buddies up newly licensed firms with existing licensees. The first conditional BitLicense went to PayPal, facilitating the launch of its new crypto services earlier this fall with the help of longstanding licensee Paxos.