OTTOWA, Ontario, Canada—The Bank of Canada has no plans to issue its own digital currency, but said that could change if cash usage drops off significantly or private options, such as Facebook’s Libra, gain widespread adoption.
The Bank of Canada has spent several years working with the country's commercial lenders to explore the creation of a DLT-based central bank digital currency (CBDC), Finextra reported.
However, it has now decided there is no "compelling case to issue a CBDC at this time," says deputy governor Timothy Lane.
Canada is already modernizing its payments infrastructure through the construction of a fast, always-on system called Real-time-Rail, while the country is also exploring open banking and working with international allies on improving cross-border payments, Finextra said.
"Canadians will continue to be well-served by the existing payment ecosystem, provided it is modernized and remains fit for purpose," Lane said.
‘World Can Change Quickly’
However, Lane does not rule out a change of heart, noting, "the world can change very quickly." For instance, if cash could no longer be used for a big enough range of transactions, cutting some people out of economic activity and reducing privacy, a CBDC could become an option, he said.
Equally, if private digital currency gained widespread adoption, the central bank may be forced to think again, Lane noted.
"This could be one dominant digital currency created by a big tech company — a monopoly that would erode competition and privacy and pose an unacceptable challenge to Canadian monetary sovereignty,” Lane said. "We could also imagine not one, but several, private digital currencies emerging.”