Bank of Canada’s Research on CBDCs
The Bank of Canada has recently undertaken a detailed study to gauge how Canadians would respond in a hypothetical scenario where cash no longer holds a dominant place in daily transactions. This scenario also highlighted the potential role of Central Bank Digital Currencies (CBDCs).
High Financial Inclusion: A Significant Factor
A notable outcome of the research is the high levels of financial inclusion within Canada. As per the data, a staggering 98% of the population already possesses a bank account. In addition to this, 87% own a credit card, and 90% — regardless of their urban or rural setting — have unhindered access to high-speed internet.
The Indispensable Nature of Cash
The Bank of Canada emphasized the importance of cash, even in an increasingly digital age. Cash continues to be a crucial fallback during emergencies, such as extreme weather events or wide-reaching power failures.
Furthermore, the research underlined the role of the Bank of Canada as the primary issuer of this traditional mode of payment.
Potential Features of CBDCs
Should Canada decide to adopt a CBDC, the research highlighted its potential features. These could encompass universal accessibility, being non-interest-bearing, incurring minimal additional costs for consumers during transactions, and ensuring a significant level of privacy. However, the CBDC would not guarantee complete anonymity.
Canada’s Stance on Cryptocurrency
Dating back to 2014, Canada was a pioneer in establishing cryptocurrency-related laws. The country launched the Proceeds of Crime and Terrorist Financing Act (PCA), aimed at regulating those dealing with cryptocurrencies.
While cryptocurrencies hold a place in the Canadian financial landscape, it’s essential to note they aren’t recognized as legal tender. According to the Currency Act’s Section 8, only the notes and coins released by the Bank of Canada carry this distinction.
Recent Crypto Regulations
In February 2023, Canada rolled out additional regulations for cryptocurrency entities. These rules required crypto businesses to pledge stronger protection for investors through an “enhanced pre-registration undertaking.” Failure to meet these commitments within the stipulated 30 days would result in these firms terminating their operations in Canada.
Major global players in the crypto market, including Binance and Bybit, opted to halt their operations within the country following these regulations.