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A Bank of Canada spokesperson stated that the bank has undertaken “significant research on the implications of a retail central bank digital currency”.
Key Notes
After seven years of exploration, the Bank of Canada is reportedly stepping back from its plans to develop a CBDC.Australia is also rethinking retail CBDCs due to concerns over financial stability.However, 65 other countries are in advanced stages of exploring digital currencies.As per the latest development, the Bank of Canada is reportedly shifting away from pursuing its central bank digital currency (CBDC). It seems that the central bank is willing to drop the project seven years after it first started exploring the idea with the goal of digitalization of payments.
A report from CBC News suggests that the Bank of Canada seems less inclined to pursue the so-called digital Loonie. So far, the Canadian Central Bank hasn’t made any official announcement of pausing its research efforts towards the CBDC.
However, in a commentary to CBC News, a Bank of Canada spokesperson stated that the bank has undertaken “significant research on the implications of a retail central bank digital currency”. The report also states that the central bank has moved its efforts towards analyzing payment system trends both in Canada and globally.
This move follows data from the Atlantic Council think tank, showing that 134 countries, representing 98% of the global economy, are exploring digital currencies, with 44 actively piloting central bank digital currencies.
In a similar development this week, the Australian Central Bank dropped the idea of pursuing a retail CBDC and instead decided to focus on a wholesale CBDC. It noted that the retail CBDC presents “non-trivial challenges” for financial stability and monetary policy implementation. On the other hand, it believes that a wholesale CBDC “would represent more an evolution than a revolution in our monetary arrangements”.
Global Push for CBDC
The recent decision from the Bank of Canada comes at a time when countries across the world have been actively pursuing their respective CBDC projects.
Nearly 65 countries, including some of the top emerging economies including India, Australia, and Brazil, are in the advanced phases of a CBDC exploration. Their respective projects are either in the pilot stages or launch stages.
Last month in August, Canadian Conservative Leader Pierre Poilievre made a strong opposition to the development of central bank digital currency (CBDC) in the country while pledging to protect cash usage and reject the government’s push toward economic digitization.
He also voiced his support for Canadian Member of Parliament Ted Falk’s Bill C-400, which aims to prohibit the implementation of such a currency.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
