The present and the future: Are banknotes phasing out?

Cash, i.e. banknotes and coins, is used relatively little in transactions in Iceland compared to the past and many other countries. It is common for banknotes to be used as gifts, such as at confirmations. Most people use electronic payment methods such as credit cards to pay for the purchases of goods and services. Payment cards can be used through a small application ("app") registered on a phone or watch. Many people find it more convenient and faster to pay with banknotes and perhaps get paid back in either banknotes or coins.

No, it can be good for households to have banknotes to be able to buy for essential goods such as food and medicine, for example, if a power outage prevents the use of payment cards.

In recent years, interest in issuing central bank digital currency has increased significantly around the world. Central bank digital currency is an electronic version of cash, banknotes and coins, issued by a central bank within its currency area. Authorities, including central banks in Europe and around the world, are now placing increasingly more emphasis on the research and development of central bank digital currency. Numerous international collaborative projects are underway, where experiments are being conducted with the use of digital money in international payment intermediation. The Central Bank of Iceland has not taken a position on whether to issue central bank digital currency, but it is closely monitoring developments abroad and will regularly assess the potential benefits of introducing central bank digital currency.