Central bank digital currencies, or CBDCs, remain of keen interest globally. The Norwegian central bank is the latest participant to explore opportunities in this vertical. Interestingly, it plans to use the Ethereum blockchain for its prototype infrastructure.
Norwegian Central Bank x Ethereum
Although the research regarding this CBDC is still in the early stage, the Norwegian central bank has released the source code for its CBDC sandbox. Moreover, the technology is based on Ethereum, which is interesting. However, that decision was made before Ethereum’s recent transition to proof-of-stake. It is unclear whether the Norwegian CBDC sandbox will benefit from that switch.
The plan to create a central bank digital currency in Norway isn’t new. The central Norwegian central bank outlined its vision for “various CBDCs” in May 2021. Moreover, Norges Bank is working with Nahmii to develop that sandbox project further. The project enters its next stage as the open source code has now been made available on GitHub. The code enables testing of essential token management, including minting, burning, and transferring ERC-20 assets.
Developers can also use Norges Bank’s sandbox to deploy smart contracts and access controls. In addition, there are dedicated network monitoring tools and a custom front end to experiment with. It is a fairly comprehensive suite for developing a CBDC, although it remains unclear what Norges Bank looks for. It would not make much sense to have multiple national CBDCs in one country, though.
To access the Norwegian central bank sandbox, users need to provide the appropriate credentials. That has another benefit, as it ensures transactions can be made privately. Achieving privacy in the financial sector is often challenging, but Norges Bank’s infrastructure seems to head in the right direction. More challenging use cases will be added in the future. Nahmii wants to experiment with security tokens, token bridges, and batch payments, among other ideas.