Gov’t-backed digital currency on Canada’s horizon

Getting your Trinity Audio player ready...

Several countries have been exploring, if not already decided to implement their own digital currency. Canada may be the latest to do so, as a report has the North American country examining the idea of creating its own cryptocurrency.

Local media platform The Logic reports that the reason for developing this digital currency will be to create a higher degree of control by the Canadian government. This new cryptocurrency would replace cash and would help to allow officials to be able to monitor how these currencies were being used. What may be most noteworthy is that it would allow the government to be able to collect detailed information on exactly how people spend their money.

In a presentation titled “Central Bank Money: The Next Generation,” Gov. Stephen Poloz of the Bank of Canada provided a detailed examination of why the bank believes that creating a proprietary digital coin would be necessary. He explained that the currency would be widely available and would exist initially with paper money.

The author of this proposal, Stephen Murchison, wrote, “We need to innovate to stay in the game…the CBDC would have all the benefits [of a central bank-backed asset] and all the convenience and security of wireless, electronic payments.”

Included in the presentation was a list of over a dozen benefits that Canada would receive by launching its own digital currency. This included the fact that this additional payment method “could make the payment system more robust,” but it also recognized that there is “a risk to stable, low-cost funding” banks.

Currently, no plan is in the works to create their own digital coin. A spokesman for the central bank, Josianne Ménard, released a statement to Cointelegraph that read in part, “Our work on CBDC is exploratory, given technological advancements and the important public service that banknotes provide to Canadians.”

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.

New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.