Norway’s central bank will use the Ethereum ecosystem to issue its national currency

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Norway’s central bank, Norges Bank, is now spearheading efforts to build the country’s own central bank digital currency (CBDC). The central bank has decided to release the open source code for its CBDC sandbox.

The sandbox is currently available on GitHub as an open source Apache 2.0 license. It is designed to offer an interface to interact with the CBDC testnet. According to Nahmii, the official CBDC partner of Norges Bank, the open source code will allow developers to enable features such as token burning, token staking, and ERC-20 token transfer. The official announcement states:

In addition to implementing the appropriate smart contracts and access controls, the Norges Bank sandbox includes a custom interface and network monitoring tools (BlockScout and Grafana). The interface also displays a filterable summary of transactions on the network.

However, Nahmii added that the current version of the code will not support the main wallet of ethereum, MetaMask, by design. Only users with the proper credentials can access privately. As a result, transactions on the testnet will remain private for now.

Further Sandbox developments will include some interesting and complex use cases such as batch payments, bridging, and security tokens. Along with additional front-end development, it would involve custom smart contract work.

Norges Bank said they would deliver the second part of the project in mid-September. Soon after, they would make the source code publicly available.

Building infrastructure on the Ethereum blockchain

Norway’s central bank announced last Friday that the prototype CBDC infrastructure will be based on Ethereum technology. Earlier in May this year, the central bank had already hinted at the construction of the CBDC on Ethereum.

Back then, Norges Bank said that the Ethereum ecosystem will provide the core infrastructure for CBDC issuance, distribution, and other involved activities.

“The prototype will be used to test a number of important features for DSP,” the central bank said.

Norges Bank has been trying to work on its CBDC plans since last year. In 2021, the central bank also issued a reference document with possible CBDC designs. Back then, I was considering different blockchain options, such as Ethereum, Bitcoin, and Bitcoin SV. However, they seemed to have narrowed down to Ethereum. The official partner noted:

Nahmii AS is proud to work with Norges Bank and other institutions on this prestigious project and hopes that our joint work will help set new standards for public-private partnerships.

The news comes just as the IMF released a report noting that 97 countries and other central banks are exploring CBDCs as of July 2022. So far, only two countries have fully launched their CBDC projects, The Bahamas and Nigeria. .

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