Bank of Canada could launch digital currency
Note from bank cites mass adoption of private currencies as the main reason behind its interest
The Bank of Canada has issued a note dedicated to the planning of a central bank digital currency (CBDC).
Bank of Canada Deputy Governor Tim Lane first spoke about the matter at FinTech RDV 2020 in Montreal. He revealed that launching a digital currency is not a high priority but the bank might consider it in the near future.
According to Lane, there's no need to launch such a product so far, as Canadians are well-served by the existing payment ecosystem. But he admits that the world could change very quickly, and the project of the Canadian CBDC has to be prepared by that moment.
The Bank of Canada considers two possible scenarios that could lead to launching a digital version of cash. The first one describes the situation when the use of physical cash is reduced or eliminated altogether. The second one mentions the case when private cryptocurrencies gain mass adoption and the control over payments will be handed to private companies.
To prepare for such cases, the Bank of Canada has to develop a sustainable project of digital currency.
"The Bank of Canada would design it to provide the benefits of cash—safe, easy to access, private and a good store of value—but in a digital version that consumers could use to buy things electronically online or in person at a shop," the release.
The regulator is ready to discuss how the future digital currency should look with users. Compatibility with other payment methods, cross-border transactions, and legal issues are among the main questions raised by the Canadian central bank.
Earlier in 2019, the Canadian financial regulator mentioned the possible development of digital currency and was generally supportive of the measure.
Currently, the majority of central banks are working on projects to launch their own digital currencies. A recent survey conducted by the Swiss-based Bank of International Settlements among central banks has shown that 80 per cent of the respondents are working on digital currency in some way.
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