Although the Bank of Canada has no plans for issuing a digital currency immediately, the Central Bank is not ruling out the possibility of launching one due to potential mass adoption of private digital currencies — and the possibility of cashless societies.

Bank of Canada Deputy Governor Tim Lane spoke at FinTech RDV 2020 in Montreal, and declared that although at the moment there is “not a compelling case” for a central bank digital currency (CBDC), a prototype is on the way and the Bank plans to consult with a wide range of stakeholders to potentially design a central bank digital currency.

“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.”

The Bank sees the potential of widely used private cryptocurrencies as potential threats to the Canadian dollar. Lane added that: 

“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.” 

Central Banks are increasingly looking into digital currency

The Bank for International Settlements has found a growing number of central banks are likely to issue their own digital currencies in the next few years. While many of those launching pilot schemes are emerging economies, China is the major economy closest to issuing a digital currency. Cointelegraph recently reported that Sweden has begun trialing a digital e-krona.

Cointelegraph also reported that a major Canada-based digital commerce platform, Shopify, would join Facebook’s Libra Association.  Libra was officially announced in June 2019. It has caused global regulatory concerns ever since its appearance.

Some countries have started to look into reconsidering the United States dollar as the dominant global currency and banks have admitted that Facebook’s Libra pushed central banks to seriously look into digital currency initiatives to replace cash. 

However, the Bank of Canada was quick to reassure Canadians that their cash would not become obsolete anytime soon:

“The Bank of Canada will make sure bank notes are available to Canadians who want to use them,” said Deputy Governor Lane.