Danmarks Nationalbank published a report on the feasibility study it did in 2017 around the adoption of Central bank digital currency.
They analyzed the impact of central bank digital currency on its core responsibilities concerning payment systems, financial stability, and monetary policy. Although introducing central bank digital currency could bring advantages to Danish households and businesses, the substantial challenges associated with its implementation outweigh the potential benefits. Consequently, Danmarks Nationalbank concluded not to issue central bank digital currency.
Denmark has been closely monitoring the situation and in 2022, Danmarks Nationalbank issued a second report. The report emphasized that the majority of domestic payments in Denmark are conducted digitally, with cash being used for just over 10% of physical purchases. The limited number of individuals who prefer cash transactions cite anonymity as their primary reason, rather than a lack of trust in other forms of payment. There is no evidence to suggest that citizens perceive cash as more secure than bank deposits.
Denmark already has a well-established instant payment system in place, ensuring trust in digital transactions and enabling swift transfers between different banks. Additionally, there is a central bank guarantee that safeguards bank deposits up to a limit of 100,000 EUR.
The central bank concluded that there is currently no practical use case for implementing a retail central bank digital currency (CBDC). However, if various stablecoins of varying quality were to gain widespread acceptance, potentially fragmenting payment systems, there may be a perception that a CBDC offers greater security compared to bank deposits. This is one of the reasons why the central bank continues to monitor developments in this area.
Sources:
Danmarks Nationalbank 2017 report — https://www.nationalbanken.dk/media/rgqompbp/analysis-central-bank-digital-currency-in-denmark.pdf
Danmarks Nationalbank 2022 report — https://www.nationalbanken.dk/media/z12aimyo/analysis-no-8-new-types-of-digital-money.pdf