Domestic demand has posted high y-o-y growth rates, yet declining. The same has occurred with consumption, supported by a strong labor market. The unemployment rate is near its fifteen-year low, which also reflects on the evolution of wages. Consumers’ expectations have improved in the past few months. On the investment side, the dynamism of engineering works – mainly related to energy and mining projects – and the recent recovery of building are worth signaling out. Other indicators are consistent with a moderation of demand and output, such as the lower y-o-y growth rates of durable consumption and imports. In addition, the slower pace of growth in employment, labor income and consumer loans suggests a deceleration going forward. The Board’s evaluation is that output gaps are closed, which is also based on signs of a tight labor market and a rapid normalization of core inflation. Y-o-y CPI inflation is above the tolerance range, while core measures hover around 3%, growing at a faster pace than in the last quarter of 2011 and forecasts in the December Report. Still, as I just said, the level of core measures is consistent with our assessment of the state of output gaps. The recent inflation trend is also explained by the behavior of transport fares and the prices of fresh fruits & vegetables. The latter, probably affected by climatic conditions, have followed a pattern that contrasts with their usual patterns and have declined in the past few months.
Owing to their substantial day-to-day volatility and the interfaces with money laundering and other criminal activity, cryptocurrencies are unsuitable as a universal means of payment. On the other hand, cryptocurrencies are attractive as speculative assets. Crypto-assets is therefore a better term than cryptocurrencies. Central bank digital currencies Another possibility is central bank digital currencies (CBDC). A CBDC is a digital form of central bank money made available to the general public. A number of central banks, including Norges Bank, are assessing whether introducing a CBDC would be advisable and, if so, in what form. For the time being, banknotes and coins are the only form of central bank money, with a role to play both in a contingency and under normal circumstances. Effective electronic contingency arrangements are crucial for ensuring that the payment system is resilient to disruption. Cash is part of the overall contingency arrangements, in the role of last resort should the electronic contingency arrangements fail. Banknotes and coins will continue to be in use into the foreseeable future. However, the use of cash is relatively low in Norway compared with other countries and is declining. It is not impossible that cash usage, at some point in the future, will fall to such a low level that banknotes and coins can no longer be regarded as a generally accepted means of payment.