- Canada halts its retail CBDC research to concentrate on payment system policy development.
- Public consultation revealed privacy concerns among Canadians about a digital currency.
- Canada remains engaged in global CBDC trends and may revisit the idea in the future.
The central bank of Canada has stated that it is shifting its focus toward broader research and policy development related to the payment system. After years of research, Canada announced last week that its central bank is moving away from a retail digital currency.
Canada Retail CBDC
“With this work completed, and with other payment-related issues gaining importance, the Bank is reducing its work on a central bank retail digital currency and shifting its focus to broader research on payment systems and policy development,” reads a vaguely titled document, “Canadian Digital Dollar.”
CBC News, the Canadian public broadcaster, reported that the Bank of Canada has “shifted its focus away from the idea of introducing a digital Canadian dollar.” The article also states that the Bank is “shelving” the idea of a Canadian digital dollar.
It is unclear whether the Bank’s official statement that it has “reduced” its work on retail CBDCs and “shifted its focus to broader payment research” means it has entirely abandoned the idea of retail CBDCs.
Especially since the Bank also stated it would “continue to monitor global developments in retail CBDCs and publish related research,” there would be “further opportunities for Canadians to provide input on a potential digital dollar” and that all the research done so far would be “invaluable if, in the future, Canadians… decided they want or need a Canadian digital dollar.”
Canada’s latest position comes as the CBDC debate has become an issue in U.S. presidential elections, despite Federal Reserve Chairman Jerome Powell stating that he was nowhere near recommending—or adopting—a CBDC in any form and that “people don’t need to worry about it.”
However, the Bank of Canada’s update comes less than three months after a staff discussion paper stating that the “relevance of cash is likely to decline in the future, so a well-designed CBDC would help bridge the gap” and maintain the relevance of public retail money in the economy.
By the end of 2023, the Bank received nearly 90,000 responses to a public consultation paper, most of which reflected privacy concerns.
Conclusion
In conclusion, Canada’s decision to shift focus from its retail CBDC initiative shows its adaptability to emerging priorities in the financial landscape.
While it may have set aside the idea of a digital dollar for now, the Bank of Canada remains vigilant, leaving the door open for future possibilities. The evolving global trends and public concerns will shape the direction of Canada’s digital currency exploration moving forward.
