Bank of Canada Dismisses CBDC Interest; BoC is Developing A Prototype to Hedge Against Libra
- The Central Bank of Canada's Deputy Governor, Tim Laine, clarified that it wasn't in the banks' best interest to launch a CBDC.
- But plans are underway to create one should the need arise.
- Laine was in Montreal for the FinTech RDV 2020 where he issued a speech on ‘Money and Payments in the Digital Age’.
Despite the reserved nature of Canadians, the country’s monetary authority has been keeping an openminded approach to researching the need for digital payments. The regulator has since identified two factors that might accelerate the launch of a Canadian CBDC. According to Laine, they would have no option but to adapt to the interest of the public if more opt for private cryptocurrencies as a means of transaction in the future;
“The Bank would do this as a trusted public institution, creating an official digital currency that is designed with the interest of the public as its top priority, with no commercial motive.”
Another scenario that would force the Bank of Canada to act, is the elimination or restriction of fiat currencies in existing financial ecosystems. This is, however, is a far-fetched thought given that fiat currencies have proven to be efficient in foreign trade stability since taking over from the gold standard.
Canada’s CBDC Progress and Other Central Bank Prospects
Facebook’s proposed stablecoin ‘Libra’ created a frenzy amongst central banks and has now initiated further research and pilot prototypes for a local CBDC's. The Bank of International Settlements (BIS) most recent survey shows activity by central banks in this matter went up by 10% within the past year. China is currently leading this pack with speculations that their coin will be ready for launch in 2020.
The Canadian CBDC is at its prototype stage with ongoing consultations between the regulator and stakeholders in blockchain and crypto;
“We need to move forward to work out what a potential CBDC might look like and how it could be managed.”
Following this initiative, the bank posted to the Canadian public questions on what type of CBDC would be convenient and attractive. In addition, how will the regulator ensure that illegal activities will not thrive with the introduction of a central bank-backed digital currency ecosystem?