30s Summary

Norway’s central bank, Norges Bank, is considering the creation of its own digital currency and supporting the EU’s new crypto-asset regulations, MiCA. The bank’s digital currency exploration leader, Kjetil Watne, indicated the institution is working through potential issues related to decentralized finance. Watne also indicated that any digital currency issued would supplement, not replace, traditional cash. He clarified that while digital payments will leave a trail, the bank has no plans to monitor individual transactions or balances. The potential impact of the new MiCA regulations on the banking sector is being reviewed.

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Norway’s central bank, Norges Bank, is supporting the EU’s new regulations about crypto-assets, known as MiCA, while also looking at creating its own digital currency. Kjetil Watne, who leads Norges Bank’s efforts to explore a digital currency, said in a chat with Cointelegraph that the bank also needs to work out if any extra rules are needed to keep things stable and secure.

They haven’t made a call on whether or not to release a digital currency of their own yet. They’re still figuring out how to deal with the issues that come with decentralized finance.

Watne also noted that as part of the European Economic Area, Norway is pretty much on board with EU regulations including MiCA. Its impact is currently under review by the country’s finance ministry. He thinks digital currencies could be handy for making payments across borders, but what this would look like in reality is still unclear.

In 2023, Norges Bank was part of a trial called “Project Icebreaker,” which was all about testing new ways to do retail transactions through digital currencies across borders. Watne made it clear that if they do end up issuing a digital coin, it will be a supplement to regular cash, not a replacement.

When it comes to privacy, Watne explained that the bank acknowledges that digital payments will leave digital traces. However, he stressed that Norges Bank is not snooping on individual transactions. Moreover, they, along with most other central banks, have no plans to sneak a peek at customer digital currency payment details or account balances.

As a final point, the new MiCA regulations kick in on December 30 and according to Tether CEO Paolo Ardoino, it may expose the banking sector to potential risks, especially for stablecoin reserves. This is because a considerable chunk, at least 60%, of stablecoin reserves must be held in European banks. Ardoino warns that this could cause problems if one of these banks goes belly up since banks are allowed to loan up to 90% of their reserves.