The Bank of Canada does not seem to be in any rush to deploy a Central Bank Digital Currency (CBDC), according to one deputy governor. “We don’t currently see a strong case for issuing it, but the world is progressing very rapidly and probably even more so in the wake of the pandemic,” Deputy Governor Timothy Lane said in a panel Wednesday.
“We don’t currently see a strong case for issuing it, but the world is progressing very rapidly and probably even more so in the wake of the pandemic,” Deputy Governor Timothy Lane said in a panel Wednesday. Lane said that while the Bank of Canada is not ready to support a CBDC, they understand that the world of finance is moving toward cryptocurrencies and other digital transactions.
“One of the things we’ve been keeping an eye on is the declining use of use of cash and use of banknotes in Canada,” Lane said. “Where it could start to become a problem is if we actually hit a tipping point where people who are reliant on cash, because they don’t have good bank accounts or they live in remote areas, or very poor people that are homeless, and so on, those people could be completely frozen out of the economy if their only available means of payment becomes no longer widely accepted.”
Lane said that he believes there is a high level of trust in the Bank of Canada, as demonstrated by the wide use of banks. “We’ve seen with cryptocurrencies the use of the blockchain… was really to deal with a situation where you’re not relying on any third party to establish trust,” said Lane. “But with a central bank digital currency, if you don’t trust the central bank, then we’re out of that game.” A Canadian CBDC also has the potential to operate more efficiently than other cryptocurrencies, Lane said.
“When we think about a CBDC, trust is an important thing we’re bringing to the table,” said Lane. “That, of course, means that we wouldn’t have to rely on those environmentally very wasteful methods of mining technologies that we’ve seen with cryptocurrencies, and that is certainly a major advantage of a CBDC relative to any other crypto project.”
Recently, Federal Reserve Chairman Jerome Powell signaled that the US Federal Reserve was in no hurry to support a digital dollar. This appears to be the same approach the Bank of Canada is taking.
