The Norwegian Central Bank also known as Norge Bank releases the open source code for its central bank digital currency through the Norge Bank Sandbox to test its CBDC through the Ethereum network.
Norwegian central bank releases the open source code for the country’s central bank digital currency (CBDC). The prototype infrastructure is based on the Ethereum network.
The Norge Bank Sandbox offers users a simple user interface for interacting with the test network.
The Ethereum-Based Sandbox
The sandbox, available on GitHub, enables functions such as minting and burning. According to the CBDC partner Nahmii, the sandbox also allows the transfer of ERC-20 tokens.
The Norge Bank sandbox deploys the appropriate smart contracts and access controls. The Sandbox also reveals a filterable summary of transactions on the front end of the network.
On 9th September, Norges Bank, on Twitter, claimed that the prototype depends on the Ethereum network monitoring tools. The network monitoring tools include Grafana and Blockscout. Nahmii however insisted that the current version does not support MetaMask. Subsequently, the current version does not support the Ethereum wallet by design. The version currently remains accessible to users with appropriate accessibility credentials.
Decoding Norge Bank’s CBDC plan
In May, Norges Bank claimed that the Ethereum cryptocurrency system would provide a core infrastructure that would encompass issuance and distribution. The infrastructure also entailed the destruction of central bank money, also known as DSP. The bank insisted that the prototype infrastructure will test several features for DSP.
In April 2021, the Norges Bank announced plans to conduct CBDC tests. The bank expected to find a preferred CBDC solution. The process involved trailing different designs for 2 years.
In November 2021, the central bank issued a working paper. The paper detailed possible CBDC designs. The CBDC designs included those based on Bitcoin, Bitcoin SV and those based on Ethereum. The plan emphasized deeply on the interoperability of the system. Interoperability acted as one of the key problems while considering different technical solutions.
CBDC adoption
The move by the Norwegian central bank came after the IMF released its report. The International Monetary Fund (IMF) released a report in July 2022. The report indicated that 97 countries remained steadfast in exploring CBDCs. This accounted for more than half of the global central banks.
Apparently, only two countries fully launched their CBDC projects. The Bahamas and Nigeria paved the way for CBDC project implementation.
In September 2021, IMF promised an interoperable CBDC platform. The IMF intends to connect multiple global CBDCs. The lending institution aims to enable border transactions through an interoperable system.
The adoption of CBDCs seems to transform the current, global financial system. The introduction of CBDCs gives businesses and citizens direct access to digital currency. The digital currency consequently remains backed by assets held by Central Banks.
Presented as a digital token, CBDC supports solutions to societal issues such as financial inclusion. For example, CBDCs make it possible to democratize access to the financial system.
Unbanked access may be converted to mobile telephony. In addition, the networks traverse a wider audience than the banking network.
