As a seasoned researcher with a penchant for understanding global financial trends, I must admit that the Bank of Canada’s recent decision to pause its CBDC project has piqued my interest. Having closely followed the digital currency landscape for years, I’ve seen nations from the Bahamas to China dive headfirst into this new frontier.
It appears that Canada’s plan for a Central Bank Digital Currency (CBDC), initiated in 2017, has temporarily halted.
Based on a CBC news report dated September 18, after extensive exploration of the possibility of creating a digital form of the Canadian dollar, the national bank has chosen to abandon this project.
Bank of Canada Rethinks Digital Currency Plan
The Central Bank Digital Currency (CBDC) initiative was launched as a reaction to the swift move towards digitalization and shifting payment patterns observed among Canadian residents. Furthermore, in the year 2022, the nation’s central bank organized a public dialogue to collect thoughts on the possibility of virtual currency.
Nevertheless, a follow-up report issued by the institution in November 2023 revealed that although Canadians were aware of CBDCs, many found it challenging to grasp the reasoning behind a digital equivalent of their physical currency.
In an upcoming online questionnaire, approximately 87% of respondents expressed their unwillingness to employ a digital version of the Canadian dollar. Additionally, around 92% firmly declared that they would not opt for Central Bank Digital Currencies (CBDCs) over current methods of payment under any circumstances.
Concerns about potential cyberattacks and privacy problems were brought up as well. An impressive 87% expressed worries about the Bank of Canada’s capacity to safeguard digital currency users from such threats.
The fiscal regulator has always insisted that the digital Canadian dollar would not replace paper notes, but it was meant to simplify online purchases and the transfer of funds.
It appears that they are shifting their focus, with reports suggesting they’re now concentrating on policy studies and analysis to discover strategies for adapting to the evolving local and international payment systems environment.
Global CBDC Momentum Continues to Grow
The announced change in focus towards other matters occurs concurrently with a growing global curiosity about Central Bank Digital Currencies (CBDCs). Remarkably, three nations – the Bahamas, Jamaica, and Nigeria – have already introduced these digital currencies and are currently striving to broaden their application.
Moreover, information from the Atlantic Council’s CBDC tracker indicates that by September 2024, a total of 134 countries and currency unions, accounting for 98% of worldwide GDP, are investigating central bank-issued digital currencies.
Experts note that these types of projects have been on the rise due to global political events such as Russia’s actions towards Ukraine. Currently, there are 13 ongoing cross-border collaborations underway, one of them being Project mBridge, which connects banks across China, Thailand, and other nations.
As of June 2024, China’s digital yuan trial continues to be the world’s most extensive, with reported transactions amounting to approximately 7 trillion yuan or around $986 billion. This figure represents nearly four times the total from the previous year.
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2024-09-22 21:23