More and more, the need for Central Bank digital currency is been felt across the globe. Following Facebook announcing the launch of the Libra token, many believe China’s upcoming digital yuan is a response. Follow the announcement by China, it seemed a ripple effect took place in which many more countries around the world from the Bahamas to Canada to Japan are exploring the possibility of Central Bank digital token. More than that, it is becoming less about innovation and more about a need to keep up with the changing financial landscaping lest they are left behind. This is also a testament to the progression of digital currencies as a whole.
According to recent statements, the central bank of Canada, while not actively developing a national digital token, is not ruling out the possibility and this is due to a possible cashless society as well as the overall adoption of digital currency.
Bank of Canada Deputy Governor Tim Lane recently held a talk in FinTech RDV 2020 in Montreal and during that time, touched on the possibility of a central bank digital currency in Canada. According to him, there is not a compelling case for it as of now but nevertheless, the central bank will be developing a prototype as well as speaking with stakeholders to look into the possibility of one in the future.
“The Bank of Canada would design it to provide the benefits of cash—safe, easy to access, private and a good store of value—but in a digital version that consumers could use to buy things electronically online or in person at a shop,” he said.
The Bank of Canada does also considers the mass use of private digital currency as a possible threat to the Canadian dollar. Since its inception, there has been talk about cryptocurrency replacing fiat currencies as a dominant medium of exchange and while there is certainly a long way to go before that happens, there are still concerns. With the rise of digital currencies in other parts of the world both private and government-issued, it is obvious that they cannot be ignored.
“If one or more alternative digital currencies threatened to become used widely as an alternative to the Canadian dollar, then a central bank-issued digital currency could be used to defend monetary sovereignty,” Lane said.