the statutory form of legal tender in norway if we introduce electronic central bank money? should it be banknotes and coins, or norges bank ’ s electronic money, or both? we must also ask ourselves what the consequences will be for the banking system. for many consumers, electronic central bank money could provide an alternative to deposit money in a bank, as cash does today. banks can attract deposits through the interest rates they offer. but their ability to create money and extend credit could nonetheless be affected, especially if this new form of electronic money enters into widespread use. norges bank has begun the work of assessing what the future form of money should be. this is a long - term process. whatever the conclusion, we can be fairly certain that banknotes and coins will be with us for many years yet. deposit money in banks will most likely continue to be the dominant means of payment, even if electronic central bank money is introduced. nevertheless, the very fact that these questions are being raised heralds a new era for our monetary system. choosing the direction our future monetary system and payment system will take requires not only economists, but also technologists, lawyers and other social scientists. and political decisions will ultimately need to be made by our elected representatives. it devolves upon the storting to supervise the monetary system of the realm. the questions are numerous, but we already have one of the answers. central banks were established to build confidence in the monetary system. that is still our primary task. we cannot leave the monetary system entirely in the hands of private entities. there will be a role for central bank money. we must have a legislative framework and a means of payment backed by the authorities to ensure trust in our money – as history has shown. thank you for your attention. 1 www. riksbank. se / en / the - riksbank / history / important - date / 1590 - 1668 / 2 for more details about the story of stockholms banco and the origins of the riksbank, see the riksbank website www. riksbank. se / en / the - riksbank / history / 3 harari, y. n. ( 2011 ) sapiens : a brief history of humankind. vintage books, london, pp. 201 and 207. 4 definitions of legal tender vary across countries. danish banknotes and coins, for example, are legal tender in denmark, but this is a right for the payer and an obligation for

the recipient of the payment, and not vice versa. see " report on the role of cash in society ", the danish payment council, august 2016 : and danmarks nationalbank's monetary review, 3rd quarter 2006, " legal tender ". 5 bank reserves at norges bank are not included in the total money supply ( m1, m2 and m3 ) as these reserves are financial institutions ’ claims on other financial institutions. claims between financial institutions or from the public sector are not included in the money supply. 6 we refer here to the money supply measure m3, which includes time deposits, repurchase agreements, and bonds and short - term paper with a maturity of less than two years. we do not show m1, which only includes cash and customer deposits in banks, because there are substantial breaks in our historical series and m3 is comprised almost exclusively of deposits. in february 2017, repurchase agreements and bonds were 0. 4 percent of m3. time deposits represented a somewhat larger share at 9 percent of the money supply. for more details on money supply statistics, see ssb. no / en / bank - og - finansmarked / statistikker / pengemengde. for a review of norway ’ s monetary history, see eitrheim, ø., j. t. klovland and l. f. øksendal ( 2017 ). a monetary history of norway, 1816 - 2016, cambridge university press. 7 deposit money is also reduced when customers withdraw cash. however, since cash is part of the money supply, the total money supply in the economy does not change. 8 / 9 bis central bankers'speeches 8 in isolation, diversification reduces banks ’ funding risk. increased use of wholesale funding may lead to slower growth in the money supply than in credit. banks also hold liquidity portfolios containing highly liquid securities that can be sold to compensate for deposit withdrawals. this also reduces banks ’ risk. 9 for a more detailed explanation of how money is created by banks, see “ money creation in a modern economy ”, bank of england quarterly bulletin2014 / q1, and bernhardsen, t., a. kloster and o. syrstad ( 2016 ) “ alternative virkemidler i pengepolitikken – den nødvendige monetære økosirk ”. staff memo12 / 2016. norges bank ( norwegian only ). 10 lehman brothers was an investment