Canada Works With G7 to Launch Its Central Bank Digital Currency; ‘Global Coordination’ Needed

Tim Macklem, governor of the Bank of Canada, confirmed the country is working with other members of the G7 commission to launch a CBDC. He further called on global cooperation between countries to mitigate digital currencies' risks, including money laundering across borders and other criminal activities.

The accelerated testing of China’s CBDC – a $1.5 million distribution of a real-world digital renminbi (RMB) in several cities – is rattling central banks worldwide to start building their own digital currencies. Macklem confirmed Canada is at the next stage of building integrating more fully executable plans for a digital Canadian dollar. This follows successful tests for the token’s proof of concepts.

“If another country has one and we don’t, that could certainly create some problems,” said Macklem. “So we want to make sure we’re ready.”

This month, the Bank announced they are seeking a lead economist to work in their ‘Digital Currencies and Financial Technologies’ department. As Macklem explains, the economists will play a key in formulating and monitoring a framework for money and payments and the “contingency planning” for a CBDC.

Furthermore, Macklem calls for collaboration between central banks to avoid “surprises from other countries.” He states the importance of sharing information on the digital currencies, plans to build, and “the timeline that they may do it on.”

The Bank of Canada also released a staff analytical note explaining the risks and mitigating the risks associated with CBDCs, rhetoric that seems to arise a lot from the central bank. The note explains that central banks should mitigate risks such as anonymity present in digital currencies, security management of the tokens, and competition between custodians of the CBDC’s.

With the rise of China, Libra global stablecoin, and the Bahamas, who recently announced a public release of their CBDC, Canada aims to accelerate its efforts in launching a CBDC. However, Macklem played down the development progress stating the central bank “saw no compelling need for one right now.”