Norges Bank uses Ethereum to start developing CBDC
Norwegian central bank and partner Nahmii publish open source code on GitHub
Norway’s central bank, Norges Bank, has moved one step closer to developing and issuing a central bank digital currency (CBDC).
The open source code for the bank’s CBDC sandbox has recently been released. Developed in coordination with Nahmii, a Layer 2 solution for Ethereum (ETH), the sandbox enables users to test key functions, such as burning, minting and transferring ERC-20 tokens.
Nahmii said in a blog post that the sandbox frontend “is designed to offer a clear and intuitive interface for interacting with the test network”.
Norges Bank releases CBDC sandbox code
The central bank itself tweeted a link to the open source code. It added: “Some actors are already involved in testing, but we hope more will join. You can find [the] open source code on GitHub.
In blog post, the Norges Bank said in May that it was not necessarily certain that the Norwegian variant of a digital currency will be based on open source code. However, it added open source “is a good starting point for learning as much as possible”.
“Our ambition is that the experimental testing will engage both actors and the public more broadly, and contribute to Norges Bank being able to carry out its social mission in a good way in the future as well,” added the central bank.
Almost 100 CBDC are under research and development
Norway is by no means alone in exploring the possible development and issuance of a CBDC. According to the International Monetary Fund (IMF), nearly 100 CBDCs were either in research or development stages as of July 2022. Only Nigeria and The Bahamas have actually issued a CBDC.
The Norges Bank’s decision to base its CBDC infrastructure on Ethereum technology demonstrates the growing importance and influence of the Layer 1 blockchain project.
Bank’s choice comes as Ethereum gears up for the Merge
Ethereum is currently undergoing the Merge, a substantial upgrade that will shift the blockchain’s consensus protocol from a proof-of-work method to proof-of-stake system.
In addition to making it less energy intensive and more efficient, Ethereum’s developers have expressed their hope that the Merge will make the protocol more easily scalable and attractive to other developers.
Should the Merge succeed without substantial setbacks or controversies, other central banks could follow in the Norge Bank’s footsteps.