Norges Bank, the central bank of Norway, has published the Financial Infrastructure Report 2016. The report confirms the bank’s commitment to satisfy public demand for banknotes and coins and ensure that cash functions as an efficient means of payment. It also emphasizes the important contingency role of cash in case of a crisis, as there is no evidence electronic solutions can take over the role of cash in a crisis.
Norway is often tipped as being one of the countries leading the race to become the first cashless society. And several Norwegian banks have been calling to stop using cash. But this is not the position of the central bank.
The report recalls that the value of cash in circulation has been stable for several decades at NOK 50 billion (EUR 5.3 billion for a population of 5 million inhabitants). The central bank considers that it is important for consumers to be able to choose between payment solutions because they have different characteristics and because they foster competition and efficiency of retail payments.
In Norway, the new Financial Institutions Act implemented in January 2016, requires banks to enable their customers to deposit and withdraw cash in accordance with their needs and expectations. This does not necessarily have to be done through the branch network but the service must be provided in an appropriate manner.
Cash is also the sole payment instrument which has legal tender status: this is important when both parties to a transaction fail to agree on an alternative payment option. A new series of banknotes will be introduced from 2017 onwards and will make counterfeiting more difficult.
The report recognizes that the banks' existing contingency plans for cash distribution may prove insufficient, in case of a crisis. This area will be investigated further in co-operation with the Financial Supervisory Authority.
To download the publication, click here.