Sound contingency planning demands more from us all

Press release

The Norwegian payment system is secure and efficient, but security and contingency arrangements are more important and more demanding than they used to be.

Today, Norges Bank is publishing Financial Infrastructure Report 2024. The Report focuses in particular on contingency arrangements in the payment system.

- Rapid technological advances, the complexity of the payment system and the difficult geopolitical situation have made payment system security and contingency arrangements both more important and more demanding than they used to be. Security and contingency arrangements require prioritisation at all levels, among individual entities and across sectors and borders, says Deputy Governor Pål Longva.

In contingency and security planning, Norges Bank collaborates with other public bodies, the business sector and authorities in other countries. In November 2023, the Ministry of Finance laid down a mandate for a working group to assess whether there is a need to strengthen contingency arrangements in the payment system. The working group is led by Norges Bank and will assess in particular the need for independent contingency solutions.

An important measure for improving cyber resilience in the financial sector is cyber security testing of critical financial system functions. Threat intelligence-based ethical red-teaming (TIBER) testing emulates actual threat actors in the financial sector and provides valuable learning opportunities and information on how actual threat actors operate. Functions are tested that may impact financial stability if they were to fail. The purpose of TIBER testing is to identify vulnerabilities before actual threat actors can exploit them. Two tests have been conducted in Norway according to the TIBER framework, and three are currently ongoing. The Bank is also participating in cross-border testing managed by other central banks.

The financial infrastructure in Norway is secure and efficient, operations are stable and payments can be made swiftly, at low cost. At the same time, the growing use of international payment cards has pushed up payment system costs. The Norwegian debit card payment solution, BankAxept, has announced a number of mobile payment initiatives.

- It is important that BankAxept is made available for mobile payments. This will make the payment system more cost-efficient, says Deputy Governor Pål Longva.

Norges Bank's settlement system comprises the core of the payment system. Norges Bank is currently researching the next generation settlement system to also ensure efficient, stable and secure operations in the future. Two alternative models are being examined: a separate dedicated solution for Norges Bank and a solution where the Bank participates in the Eurosystem's collaboration on a common platform for payment settlement. In the course of 2025, Norges Bank will decide which solution should be chosen.

Cash usage in Norway is low, but notes and coins continue to play an important role in the Norwegian payment system, not least with regard to contingency arrangements and financial inclusion. For cash to function, it must be available and easy to use.

- The Storting [Norwegian parliament] recently passed a legislative amendment clarifying the right to pay cash. Norges Bank is of the opinion that the amendment is important for ensuring that cash can continue to fulfil its functions in the payment system, says Deputy Governor Pål Longva.

Norges Bank's research on central bank digital currency continues.

- As global work on central bank digital currencies is still in an experimental phase involving impact assessments, more knowledge, collaboration and standardisation are needed, says Deputy Governor Pål Longva.

Crypto-assets are rarely used for payments in Norway, but a survey conducted for Norges Bank shows that 11 percent of the Norwegian population are crypto-asset holders. The purchase and use of crypto-assets is associated with risk, partly as a result of substantial value fluctuations. New products and services can raise the level of interconnectedness between crypto-assets and traditional financial assets and increase systemic risk.

Norges Bank is publishing two Norges Bank Papers together with Financial Infrastructure Report 2024: One on retail payment services and another that presents a survey on the awareness and use of crypto-assets in Norway.

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