Canada’s Central Bank Steps Back from Digital Currency Exploration
The Bank of Canada apparently is having second thoughts on how it wants to proceed with its plans to issue a central bank digital currency-what’s been called the digital Loonie. That’s seven years since the institution kicked off its studies on how the digital currency could help fix the rapid digitalization of payment systems.
Payment System Trends Take Center Stage
According to a report by CBC News, although the central bank would not confirm whether it has officially put its digital Loonie research on pause, a spokesperson from the Bank of Canada confirmed that substantial research had been done on what the implications would be of a retail CBDC. It now focuses on studying the trends in payment systems both home and abroad.
Global Push for CBDCs
This is opposite to the global trend, where 134 countries representing 98% of the global economy presently are exploring digital currencies. Precisely, according to data from the Atlantic Council, 44 countries are piloting central bank digital currencies, and more than 65-including major economies such as India, Australia, and Brazil-are in an advanced stage of exploration. In fact, all G20 countries are active in CBDC research, and 19 are in the advanced stages.
Political Resistance against Digital Loonie
Moves by the bank have also been influenced by the Canadian political backdrop. In mid-August, Canadian Conservative Leader Pierre Poilievre weighed in heavily against the development of a central bank digital currency. Poilievre promised to protect cash from the government’s drive toward economic digitization. He even expressed support for Bill C-400 by the member of the House of Commons Ted Falk, which aimed at banning the introduction of such currency.
Uncertain Future for Canada’s Digital Currency
While the Bank of Canada has not made an official announcement regarding its future plans about digital currency, the shift in focus may be interpreted as a reassessment of its role in the digital economy. As interest in CBDCs worldwide continues to rise, it would appear that Canada might jump back into the race at some point in the future to develop a digital currency.
