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Canada prepares digital currency for the future “Just in case”

Canada prepares digital currency for the future “Just in case”
By We Play Coins
Added on Feb 26, 2020

Canada prepares digital currency in case that it may be needed in the future. The Deputy Governor Timothy Lane wished to explore frameworks that would enable the digital currency to be used in case it was needed in the future.

While stressing the need for the possible future requirement, he was quick to point out that this will not be a reality any time soon. However, this is not the first central government to consider a digital currency.

Deputy Governor Timothy Lane explains how the Bank of Canada is preparing for a future where Canadians may need a digital currency issued by their central bank. He also discusses the important work underway to make sure our current payment system is modernized and working well.

Central bank digital currency? Not yet.

Canadians are well-served by the existing payment ecosystem, so we believe there is no need for the Bank of Canada to issue its own digital currency at this time. But the world can change very quickly, so we need to get ready in case one is needed.

The Bank of Canada can imagine scenarios in which we would consider issuing a CBDC so we can continue to provide Canadians with trustworthy methods of payment.

Planning for a digital version of cash

Two scenarios could warrant an introduction of a digital currency by the Bank of Canada:

If the use of physical cash is reduced or eliminated altogether, leaving some Canadians left out

If private cryptocurrencies make serious inroads, creating concerns about privacy and handing control of payments to private companies

In these scenarios, Canadians and their government could decide we need a central bank digital currency (CBDC). 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.

As we prepare for a possible future digital currency, we want to start a discussion of what it might look like in Canada. In doing so, the Bank will consult widely to answer questions such as:

What design features might make a CBDC attractive for merchants and users?

How would a digital currency work with other methods of payment?

How would a CBDC work for cross-border transactions?

How can we protect privacy while preventing illicit uses?

As the world changes, the Bank will continue to fulfill its mandate to support secure, reliable and efficient payment options that benefit all Canadians.

They continue to support cash and bank deposits

While Canadians are increasingly finding new ways to pay for things or transfer money, digital currencies—even ones issued by central banks—won’t replace cash or bank deposits. The Bank of Canada will make sure bank notes are available to Canadians who want to use them. We must also bring the existing payment system up to date and address problems with cross-border transactions.

The goal is to provide consumers, businesses and financial institutions with a modern, fast and convenient payment system. Canada prepares digital currency in case that it may be needed in the future.