Bank of Canada Plans to Rush Digital Currency Plans

The Deputy Governor for the Bank of Canada, Timothy Lane had boldly proclaimed back in February of the year that the country did not need to launch a central bank digital currency (CBDC). However, he did add that the Bank of Canada would introduce one regardless, to be ready for the possibility of needing it in the future. It seems that the tables have turned, as now Lane claims that not only is there a need to have a CBDC in the country, but that it will have to come sooner than had been anticipated by the Canadian central bank. 

Back in February, Lane had attended a FinTech conference where he said that the Bank of Canada didn’t know what the future would bring. Even so, he said that the bank was looking forward to working out how the central bank digital currency (CBDC) for the country would turn out. Furthermore, he said that if the Bank of Canada does decide to issue the CBDC, the central bank would have to figure out how to manage the digital asset. Two key scenarios were outlined in the conference by Lane in which the country’s government could be prompted to issue the CBDC that they have been developing. 

The first of the scenario was of cryptocurrencies just gaining a lot of popularity, which would result in privacy concerns or otherwise threaten the supremacy of the Canadian dollar on its own soil. The second scenario is regarding whether the society in Canada can completely phase out the usage of cash for creating a new digital economy, which would have its own economic disparity. According to the latest interview with the Deputy Governor, it appears that the second condition appears to be becoming more and more prevalent in the country. At the Centre for International Governance Innovation, which is a think tank, Lane reminded the people about the two scenarios that he had mentioned in February. 

He went on to highlight that some interesting developments had been noted by the Bank of Canada in the last nine months. This indicated that some of the conditions discussed were making an appearance a lot sooner than the central bank had anticipated. He stated that the reliance of Canadian citizens on cash had been going down, but Lane said that there was an uncertainty of whether this situation would remain the same after the coronavirus pandemic has been dealt with.

Even though these comments by the Deputy Governor are certainly not a definitive declaration, it makes it apparent that the Bank of Canada is taking a close and hard look at its plans of developing a central bank digital currency (CBDC). Lane did say that things were moving a lot more quickly than the bank had previously anticipated. While the bank is not sure of whether these trends will continue once the pandemic is over, Lane made it clear that they want to be prepared and will develop their CBDC earlier than they had planned.