Bank of Canada ready to move ‘sooner than expected’ on digital dollar

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Senior officials at the Bank of Canada have indicated progress has been made on launching a digital currency, citing the pressures of the COVID-19 pandemic as a catalyst for moving forward with plans for its central bank digital currency (CBDC).

Deputy Governor Timothy Lane, who also heads research into crypto and fintech for the bank, said that they may now be ready to move sooner than expected with a central bank digital currency.

The position is a significant development from remarks in February 2020, when Lane indicated there was “not a compelling case to issue a CBDC at this time.”

However, as a result of the coronavirus pandemic and resulting restrictions, the use of cash in Canada has significantly declined this year, with the bank continuing to monitor the use of alternative payment methods and consumer behavior.

In remarks to the Centre for International Governance Innovation, Lane set out how the events of this year had sped up plans for a central bank-backed digital currency in Canada.

“In February, we identified two scenarios that we would want to be prepared for. One of them was the disappearance of the acceptance of cash, and the second was the emergence of digital currencies that might turn out to be disruptive in some way or might undermine Canada’s monetary sovereignty.”

“I would say that in the last nine months we’ve seen developments that look like they’re in the direction of some of those things coming to pass sooner than expected. In particular, we’ve seen a shift away from the use of cash transactions much more rapidly than previously we thought was likely.”

The comments come amid a global race to launch a central bank currency, with China and the European Central Bank among others thought to be currently ahead of Canada in the timeline to launch. 

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

See also: CoinGeek Live panel, The Future of Banking, Financial Products & Blockchain