Norway is considering launching a CBDC to stabilize its economy

The Central Bank of Norway is studying the measures necessary for the country’s financial stability, including the launch of a CBDC that would contribute to improving cross-border payments.

Although the nation has given its support to the Markets in Cryptoassets Regulation (MiCA), it is currently analyzing a project on additional regulations to promote financial stability, led at the Central Bank by Kjetil Watne.

Watne has stressed that the bank has not yet made a decision but “is evaluating how to mitigate regulatory gaps related to decentralized finance.”

The project director has indicated that the Central Bank sees central bank digital currencies as a tool to improve cross-border transactions, without replacing fiat money or cash payments.

Support for MiCA but with caution

The European Union’s MiCA regulation comes into force on December 30. In this regard, its implementation could pose systematic risks for stablecoin reserves, according to Paolo Ardoino, CEO of Tether.

“Under MiCA, stablecoin issuers will be required to hold a significant portion of their reserves, at least 60 %, in European banks, which creates a concern regarding lending,” Ardoino stresses, noting that the MiCA requirements “could create significant points of vulnerability for reserves if a bank holding them goes bankrupt” considering that banks can lend up to 90% of their reserves.

M.Pino

Source: cointelegraph

(Reference image source: Sandro Kradolfer in Unsplash)

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