The Bank of Canada has launched a public consultation that aims to assess how a digital dollar would fit into the Canadian economy.
As more and more countries around the globe are looking to implement digital versions of their standard currencies, Canada is also considering the launch of a central bank digital currency. Admittedly, Canada’s efforts are in the early stages when compared to countries such as India, which was preparing the rollout of a retail digital rupee pilot in November 2022 following a testing phase of the wholesale usage of its CBDC.
According to bankofcanada.ca, the way Canadians pay for everything, from daily necessities to major purchases, is changing at a rapid pace, a change fuelled by increased digitalisation around the world. This is the reason why the Bank of Canada, like many other central banks, is exploring a digital version of the Canadian dollar.
Canada’s consultation kicked off on 8 May 2023 and will run until June 19, and it’s worth noting that no decision has been made on whether to launch a digital Canadian dollar at the time of writing. That decision rests with Parliament and the Government of Canada, but the consultations in question will potentially influence the decision.
According to the Bank of Canada, a digital Canadian dollar would have to be designed to serve the needs of Canadians. The bank’s online consultation aims to understand which features are most important to Canadians, which is why it is seeking opinions about topics such as use cases, security concerns, and privacy concerns.
What does the future hold for cash?
The bank also emphasised that it has been providing bank notes to Canadians for more than 85 years. Its representatives highlighted the safety, accessibility and trust associated with cash, and mentioned that it can be used even by the country’s unbanked population. In this context, if a digital Canadian dollar will be issued in the future, the bank will make sure that cash will still remain in circulation.
The Bank of Canada also brought up some concerns about private cryptocurrencies or central bank digital currencies issued by other countries that could become widely used in Canada in the future. The bank believes that this scenario could compromise the role of an official, centrally issued currency such as the Canadian dollar, which could pose a risk to the stability of the country’s financial system. The bank will publish a report with a summary of this public consultation later in 2023.
Source: The Paypers