Originally published on: November 09, 2024
Norges Bank, the central bank of Norway, has voiced its support for the European Union’s Markets in Crypto-Assets Regulation (MiCA) while also exploring the potential adoption of a central bank digital currency (CBDC).
Project director Kjetil Watne from Norges Bank’s CBDC project discussed in an exclusive conversation with Cointelegraph the country’s stance on MiCA. While Norway is part of the European Economic Area (EEA) and aligns closely with EU regulations, the bank is evaluating the necessity of additional regulations for promoting financial stability.
Watne acknowledged that the decision to issue a CBDC is still pending and highlighted the importance of addressing regulatory gaps related to decentralized finance to ensure a robust framework.
Norges Bank sees CBDCs as potentially beneficial for cross-border payments, although the specific details of a CBDC-based cross-border payment system are still under consideration.
In 2023, Norges Bank participated in “Project Icebreaker,” aiming to trial new architectures for retail CBDC transactions across borders, indicating a proactive approach to exploring the potential of CBDCs.
Watne also addressed privacy concerns surrounding CBDCs, emphasizing that the bank is focused on digital payments’ broader implications rather than monitoring individual transactions. Most central banks, including Norges Bank, do not intend to access customer CBDC payment details or account balances.
The MiCA regulation by the EU, set to be fully effective on Dec. 30, raises concerns about potential systemic risks in the banking sector, particularly for stablecoin reserves. Tether CEO Paolo Ardoino highlighted the risks associated with MiCA’s requirement for stablecoin issuers to hold a significant portion of their reserves in European banks and the implications this could have on reserves in case of a bank’s bankruptcy.
As countries like Norway continue to navigate the evolving landscape of digital currencies and regulations, the future of CBDCs and their role in financial stability remains a compelling topic to watch.
