Norway’s central bank creates a national digital currency on the Ethereum blockchain

Norway's central bank creates a national digital currency on the Ethereum blockchain

Norway’s central bank has just taken an important step in its work on creating its digital currency, by releasing the open source code for the central bank’s digital currency sandbox (CBDC).

Available on GitHub, the sandbox is designed to provide an interface to interact with the test network, providing access to features such as creation, burning and transfer of ERC-20 tokens, said Nahmii, the official partner of the Bank of Norway CBDC, in blog post.

Nahmii pointed out that the current version of the code does not support MetaMask’s main Ethereum wallet by design and is only privately accessible to users with the correct credentials.

In addition to deploying the appropriate smart contracts and access controls, Norges Bank’s sandbox includes a customized front end and network monitoring tools such as BlockScout and Grafana. The frontend also displays a filterable summary of network transactions, Nahmii noted.

Norges Bank published on Twitter on Friday that Norway’s CBDC prototype infrastructure is based on Ethereum blockchain technology.

The central bank previously referred to Ethereum in a blog post about the CBDC in May. Norges Bank said the Ethereum crypto system should provide “basic infrastructure” for the creation, distribution and deletion of the central bank’s digital currency, also known as DSP. “The prototype will be used to test several key features for the RCS,” the bank said.

As previously reported, Norges Bank officially announced its intention to conduct CBDC trials in April last year, hoping to find the best CBDC solution by testing different models over a two-year period.

In November 2021, the central bank released a working paper referring to possible CBDC models, including those based on blockchains such as Ethereum, Bitcoin, and Bitcoin SV. Norges Bank highlighted interoperability as one of the most important issues when considering different technical solutions.

Also read: The Reserve Bank of India is gearing up to test CBDC with public sector banks and fintech

This news comes as the International Monetary Fund released a report indicating that 97 countries, or more than half of the world’s central banks, were exploring or developing CBDCs as of July 2022. In contrast, only two countries have fully launched CBDC projects to date. , namely Nigeria and the Bahamas, the IMF said.

Global development of CBDCs in 2022. Source: IMF

In September, the IMF said it was working on a project related to an interoperable CBDC platform that connects multiple global CBDCs and enables cross-border transactions.

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