The COVID19 Pandemic Has Accelerated Canada’s Central Bank Plans for A CBDC

The Bank of Canada (BoC) may be considering accelerating its Central Bank Digital Currency (CBDC) plans. However, this was not the stance earlier in the year when one of its deputy governors, Timothy Lane, spoke at the Fintech RDV conference held in Montreal. As reported by BEG at the time, the BoC had little interest in a CBDC as it appears to have now. However, Lane had highlighted that the Canadian monetary authority would keep tabs on the development in CBDCs as part of preparations, should it need to launch one. The deputy governor’s exact sentiments were, “While we don’t know what the future may bring … we need to move forward to work out what a potential CBDC might look like and how it could be managed if the decision were ever taken to issue one.” During the conference, Lane expounded on two scenarios that would accelerate the bank’s need for a CBDC. The first one was a shift from physical cash into virtual ecosystems, while the second scenario was growing in popularity for private cryptocurrencies. COVID-19 May Have Accelerated Pre-Conditions for a Canadian CBDC The deputy governor has now signaled that a shift has accelerated the first pre-condition to virtual ecosystems at the pandemic's onset. Speaking at an interview with Canadian think, Centre for International Governance, Lane said that the past nine months had depicted a trend where the laid out scenarios may come to pass sooner. “I would say that in the last nine months, we’ve seen developments that look like they’re in the direction of some of those things coming to pass sooner than expected.” He particularly noted the reduced use of cash by Canadians this year, a shift that the BoC is closely watching, per Lane’s comments. However, Lane also mentioned that they are yet to confirm whether the change is temporary or outlive the pandemic. “Although we don’t know how long they’re going to persist, it’s more urgent for us to make sure that we’re ready if we have to be ready. So, our work definitely has to move forward.”

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