Important work is underway at an international level to adapt regulation, supervision and oversight to the new landscape. Norges Bank supports this work. Two of the main considerations are that society as a whole must reap the benefits of the new solutions, while the associated risks must be contained. We also want to be a driver behind changes that enhance the efficiency and safety of the payment system. An example is the work on developing real-time payment solutions, which today allow payments to be sent within seconds to the payee’s account. We are also considering whether Norges Bank should take on a more operational role in the real-time payment infrastructure. In our work, we have to take a precautionary approach and keep a close eye on the potentially far-reaching implications for the financial system of some of the changes underway. We must ask ourselves whether measures will be needed so that we can continue making payments in Norwegian kroner efficiently and securely in the future. Chart: Central bank digital currency A key issue is whether Norges Bank should launch a central bank digital currency (CBDC).13 Unlike central bank reserves, which is electronic money for use solely by banks, a CBDC will be available to everyone, just like cash. And unlike e-money platforms or cryptocurrencies, a central bank will stand behind it and guarantee its value. If we introduce a CBDC at some point in the future, the purpose will be to safeguard confidence in the monetary system and to promote an efficient and secure payment system.
Chart: Today’s topics To shed light on these questions I will look at what actually characterises the role of banks, how competition from new participants might influence the financial system and finally the implications of the changes underway for Norges Bank’s role and responsibilities. 1/7  BIS central bankers' speeches  The role of banks in the financial system The financial system should deliver a number of very basic services. We want to be able to borrow in order to study or buy a home today, while paying out of future income. We also want to be able to borrow long-term to finance investment projects with high expected returns. In addition, we need a means of payment that provides fast, safe and reasonably priced settlement services for both domestic and cross-border transactions. The means of payment should also be a savings vehicle. A pre-condition is that we have confidence in the current and future value of money. In today’s system, banks have a key role in providing these services. They offer credit, savings products and payment services. Chart: Banks provide credit Banks are often described as agents that provide credit by taking deposits from savers and lending part of that money to borrowers. This description of banks is not entirely wrong, but overlooks an essential component of banking and a function that distinguishes banks from nonfinancial firms. Chart: Banks create money The description does not explain where the deposits originate. The deposit placed in one bank can come from another bank.