NextGen Nordics: Retail CBDCs could jeopardise commercial banks’ deposit base

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Jussi Snellman, senior manager, P27 Nordic Payments, provided an overview of the state of play of CBDCs in the Nordics and explained that these digital instruments combine two existing elements – central-bank issued public money such as notes and coins, and digital central bank money such as reserve deposits. “This combination was not available until now. Depending on the design [of the currency], there could be wildly different instruments all labelled CBDCs. Therefore, we cannot talk about the benefits and the downsides without knowing what kind of CBDC we are talking about,” Snellman said.

Nordic central banks have been exploring CBDCs since 2017 and although pilots and experiments have been completed, most countries have concluded that “at this point, there is not sufficient social need for a launch of a CBDC,” Snellman added.

However, the panel agreed that technology and political trends may drive people to reconsider, especially as the ECB is on a different track with the digital euro.

Krister Billing, market infrastructures and regulatory affairs, corporate banking, SEB, added that 80% of central banks are exploring CBDCs in one form or another. While trends suggest we are moving towards a cashless society, Billing mentioned that a “great deal of clarity from the government and a balanced conclusion across the potential areas of opportunity would be needed. However, there is no urgent societal need for CBDCs.”

Jonas Palm, Nordic product manager cash management, BNP Paribas, also said that it must be considered that there are “different needs and uses for CBDCs.” He referenced that the addition of digital currency will be cumbersome, however, in areas such as Asia and South America, where they are “enabling the