The Bank of Canada and Digital Currency

The Deputy Governor of the Bank of Canada gave a speech titled “Money and Payments in the Digital Age.” He made it clear that the country’s central bank has no intention to issue its digital currency.

It is worth mentioning that the Bank of Canada was one of the most active students of the Centra Bank Digital Currencies (CBDC) concept. Moreover, it ran a pilot project on R3’s distributed tech solution Corda. Last year, Canada’s central bank live-tested this project in cooperation with the Monetary Authority of Canada.

Nevertheless, the Bank of Canada came to the conclusion that there was no apparent need for digital currency. According to Deputy Governor Timothy Lane, cash works and Canadian will continue to use the existing payment ecosystem.

Digital currency and new projects

The situation might change if more people would start using private cryptocurrencies. The biggest threat is Facebook’s project Libra, the stablecoin initially created by Facebook and now led by a group of companies.

It is hard to say when this digital currency will become available as there is no timeline on the stablecoin’s launch. However, the development continues despite the problems, and it means that Libra will become available sooner or later.

The Bank of Canada may have to change its position regarding the digital currencies if Libra is going to change the status quo.

Currently, the country’s central bank is engaged in exploratory work. Moreover, the bank works with other central banks, including Sweden U.K. Japan, etc. Central banks decided to join the forces to learn more about digital currencies issued by the central banks.

Last week, representatives from several central banks gathered in Kyiv, Ukraine, as part of a CBDC-focused conference. They shared a common view that central banks don’t need blockchain-like for a digital payment system.

The digital currency has the potential, but it will take time until it will become popular. Central banks do not want to interfere with this process.