Canada Moves Away From Retail CBDC, Shifts Focus to Broader Payments

As a seasoned analyst with over two decades of experience in the financial sector, I’ve seen numerous trends come and go. In the case of Canada’s central bank digital currency (CBDC), it seems we have a temporary pause rather than an outright dismissal. The Bank of Canada has decided to focus on broader payments system research and policy development, but they’re keeping the door open for future discussions should the need arise.

I, as an analyst, am sharing that over the past few years, I’ve been closely following the exploration by the Bank of Canada regarding a retail central bank digital currency. However, in a recent announcement, they have signaled a shift in their focus away from this specific area.

Having finished this project and as other payment-related matters become more significant, the Bank is reducing efforts towards creating a retail central bank digital currency and instead focusing on comprehensive studies and policies related to the entire payments system.” – As per a document labeled “Digital Canadian Dollar”.

According to a report by CBC News, the Canadian public broadcaster, the Bank of Canada acknowledged that it is no longer considering the concept of launching a digital version of the Canadian dollar. In simpler terms, the bank has decided not to proceed with the idea of creating a digital Canadian currency.

It’s unclear if the bank’s announcement that it is reducing its retail Central Bank Digital Currency (CBDC) projects and focusing on wider payment research instead, implies that they have abandoned the retail CBDC concept entirely.

Specifically, since the Bank has indicated it will keep tracking international progress on retail Central Bank Digital Currencies (CBDC) and produce related studies, there may be more chances for Canadians to voice their opinions about a potential digital Canadian currency. Moreover, all the research conducted till now would prove beneficial if, at some point in the future, Canadians choose to adopt or require a digital version of the Canadian dollar.

The most recent stance by Canada on Central Bank Digital Currencies (CBDC) has emerged amidst the U.S. presidential election discussions, even though Federal Reserve Chair Jerome Powell has clarified that the U.S. is not close to endorsing or implementing a CBDC in any shape or form. Moreover, there’s no need for concern as he reassured the public on this matter.

However, the Bank of Canada’s recent update arrives less than three months following a staff discussion paper suggesting that cash could become less significant in future economic transactions. A well-designed Central Bank Digital Currency (CBDC) could potentially bridge this gap and preserve the importance of retail public money within the economy.

By the close of 2023, the Bank garnered nearly 90,000 replies to its public inquiry document, and the majority of these responses expressed apprehensions about privacy matters.