After several years of exploring the potential for a digital Canadian dollar, the Bank of Canada has announced it is shelving its plans for a retail central bank digital currency (CBDC).
While the bank initially launched its CBDC research in 2017 in response to the rapid digitalisation of payment systems, it has now shifted its focus to broader issues surrounding the evolving payments landscape in Canada.
The decision to move away from a “digital Loonie” follows years of research and public consultation.
Earlier this summer, the Bank of Canada published a staff discussion paper that highlighted the potential benefits of a CBDC for maintaining monetary sovereignty and financial stability in a cashless society.
However, recent statements confirm that the bank’s focus has turned toward other priorities, including policy research on wholesale and retail payments infrastructure and cross-border payments.
“The Bank has undertaken significant research towards understanding the implications of a retail CBDC,” a statement from the central bank read.
“With this work completed and other payments issues gaining prominence, the Bank is scaling down its work on a retail CBDC and shifting its focus to broader payments system research.”
This pivot comes at a time when more than 130 countries are exploring CBDCs, according to the Atlantic Council.
However, only three nations – the Bahamas, Jamaica, and Nigeria – have fully launched such digital currencies. The slow pace of adoption highlights the complexity and potential risks associated with introducing digital currencies into established financial systems.
Karl Schamotta, Chief Market Strategist at Corpay, echoed this sentiment, stating, “A digital Loonie doesn’t offer many advantages right now,” and noting that preserving the safety and tested features of the traditional monetary system remains a priority.
The Bank said it would “continue to monitor global retail CBDC developments and publish some related research,” there would “be further opportunities for Canadians to provide input on a potential digital dollar,” and that all the research done so far would be “invaluable if, at some point in the future, Canadians…decide they want or need a digital Canadian dollar.”
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