Norwegian central bank uses Ethereum to build national digital currency

Norwegian central bank uses Ethereum to build national digital currency


The central bank of Norway has hit a major milestone in digital currency efforts, releasing the open source code for the country’s central bank digital currency (CBDC) sandbox.

Available on GitHub, the sandbox is designed to offer an interface for interacting with the test network, enabling functions like minting, burning and transferring ERC-20 tokens, the Norges Bank’s official CBDC partner Nahmii said in a blog post.

Nahmii stressed that the current version of the code does not support the major Ethereum wallet MetaMask by design and is only privately accessible by users with appropriate credentials.

In addition to deploying the appropriate smart contracts and access controls, the Norges Bank sandbox includes a custom frontend and network monitoring tools like BlockScout and Grafana. The front end also shows a filterable summary of transactions on the network, Nahmii noted.

The Norges Bank took to Twitter on Friday to mention that Norway’s CBDC prototype infrastructure is based on Ethereum technology.

The central bank previously made a reference to Ethereum in a CBDC-related blog post in May. The Norges Bank stated that the Ethereum cryptocurrency system is expected to provide a “core infrastructure” for issuance, distribution and destruction of digital central bank money, which is also referred to as DSP. “The prototype will be used to test a number of the important features for DSP,” the bank said.

As previously reported, the Norges Bank officially announced plans to conduct CBDC tests in April last year, expecting to find a preferred CBDC solution by trialing different designs for a period of two years.

In November 2021, the central bank issued a working paper referring to possible CBDC designs, including those based on blockchains like Ethereum, Bitcoin and Bitcoin SV. The Norges Bank emphasized that interoperability was one of the most important problems while considering various technical solutions.

Related: Reserve Bank of India preparing to trial a CBDC with public sector banks and fintechs

The news came amid the International Monetary Fund releasing a report indicating that 97 countries, or more than half of global central banks, were exploring or developing CBDCs as of July 2022. On the other hand, only two countries have fully launched CBDC projects so far, including Nigeria and The Bahamas, the IMF said.

Global CBDC development in 2022. Source: IMF

In September, the IMF said that it had been working on a project related to an interoperable CBDC platform connecting multiple global CBDCs and enabling cross-border transactions.