Banks have never been excited about decentralized currency. Norway’s central bank has not been much trusting either. The dramatic price slump in the prices of Bitcoin has made them even more concerned. The price of Bitcoin has dipped by almost 30% when China’s central bank banned financial and payment institutions for using it in transactions.
The Norwegian Central Bank stated that in its opinion dramatic price swings in the crypto market could destabilize the banking system if investors continue to increase their investment. The Executive Director of Financial Stability Torbjorn Haegeland said in an interview, “We don’t see these swings that we’ve seen yesterday as major threats to financial stability but if exposures continue to increase, that may pose a threat”.
The Norwegian Central Bank is not the first one to express its concerns in the cryptocurrency market. Bank of England’s Governor Andrew Bailey also stated some time ago that people should only invest in crypto market if they are prepared to lose their money. This statement clearly voiced the concerns of people about the volatile nature of the market.
Although major banks including the Bank of England and Chinese Central bank have been working on their own digital currencies, they have been skeptical about the crypto market. Chinese are working on the digital yuan which is currently a pilot project in four Chinese cities. One of the reasons is that the decentralization of money is taking away the power and sway of banks that they have on money currently.
Most Banks are looking to have a digital currency in the market which could allow cashless transactions but they would keep cash in the market.