Cash Is Still the Top Choice for Bank of Canada Governor, Leaving Crypto in the Dark

The cryptocurrency industry is over a decade old, and there are many countries that have slowly adopted regulations to support its innovation. Despite having a crypto-friendly atmosphere in nearby regions, Governor Stephen S. Poloz of the Bank of Canada is not among the supporters. In a recent presentation to the Empire Club of Canada, Poloz discussed the reasons he has for backing cash, but not feeling the same adoration of cryptocurrency.

One of the points that Poloz made was over the role that technology has played in payments for Canadians, saying that most of the work in the wholesale payment system should be done next year. Furthermore, in the next two to three years, consumers will be able to handle transactions in real-time between each other, which is a major improvement in the lags that the current system faces.

Poloz stated, “Now these prospects have the bank thinking hard about the future of… money. Especially cash, which is really my favorite.”

About half of the payments in Canada were made in cash just a decade ago. Now, that portion has dropped down to about a third of all of the transactions, which is still considerably large when compared to other nations with similar levels of development. The use of smartphones and cards are becoming more useful in the region, and there are many businesses that will only accept payments made electronically.

However, Poloz added, “I believe that central bank money, the banknotes you have in your pocket, will always provide an important public good. It’s an individual’s sovereign right to make payments with an instrument that is universally accepted and final.”

Continuing, he pointed out that private digital currencies cannot offer the universal acceptance that cash does, regardless of the innovations made by the industry. However, if the use of these cryptocurrencies becomes as widespread as cash with its universal acceptance, could the governor change his mind?

Poloz switches to speak on the benefits of cash again, adding that it “will still work even during power blackouts or cyber attacks.” Because of this advantage, he believes that banknotes will continue to survive through the digital age, “if only as a contingency for unusual events.”

Regardless of this love of cash, Poloz seemed to leave the question of issuing a central bank-based cryptocurrency open for now. He instead stated that the need to issue such a substitute was an open question in itself, commenting that it is best for the government to prepare for “whatever contingency does arise” in the financial industry. He then implied that there are other announcements that the Central Bank would likely wait to address until next year, though he noted that emerging payment technologies are interesting to the bank.