Norwegian central bank uses Ethereum to build national digital currency

The open source code for Norway’s digital currency (CBDC sandbox) has been released by the central bank of Norway, marking a significant milestone in its digital currency efforts.

The sandbox, which is available on GitHub, was created to allow users to interact with the test network. It enables functions such as burning, minting and transferring ERC-20 tokens. Nahmii, Norges Bank’s official CBDC Partner, stated in a blog post.

Nahmii stated that the current code does not support the major Ethereum wallet MetaMask and can only be accessed privately by those with the appropriate credentials.

The Norges Bank Sandbox not only deploys the correct smart contracts and access control, but also includes a custom frontend as well as network monitoring tools such BlockScout or Grafana. Nahmii added that the frontend also displays a filterable summary listing all transactions across the network.

On Friday, the Norges Bank used Twitter to announce that Norway’s prototype infrastructure for CBDC is built on Ethereum technology.

In May, the central bank made reference to Ethereum in a blog post about CBDC. According to the Norges Bank, the Ethereum cryptocurrency system will provide a “core infrastructure” to allow for the issuance, distribution, and destruction of digital central banking money (also known as DSP). The bank stated that the prototype would be used to evaluate a variety of important features for DSP.

The Norges Bank announced in April that they would conduct CBDC testing. They expect to discover a preferred CBDC solution and will test different designs for two years.

The central bank published a working paper in November 2021 that discussed possible CBDC designs. It included those based on blockchains such as Bitcoin, Ethereum, and Bitcoin SV. While examining various technical solutions, the Norges Bank stressed that interoperability was a key problem.

Related: Reserve Bank of India is preparing to test a CBDC together with public sector banks, fintechs

This news was made possible by the International Monetary Fund’s July 2022 report, which indicated that CBDCs were being developed or explored in 97 countries. The IMF stated that only two countries had launched CBDC projects, including Nigerian and The Bahamas.

In 2022, global CBDC development Source: IMF

The IMF announced in September that it was working on an interoperable CBDC platform linking multiple global CBDCs to enable cross-border transactions.

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