The Bank of Canada is exploring its option for introducing a central bank digital currency. In a presentation obtained by the Financial Times the bank states that a central bank digital currency would offer ‘all the benefits’ of its normal assets, while providing ‘all the convenience and security of wireless, electronic payments’.
The bank highlights crypto’s potential to gather information for the authorities. Personal details that might not be shared with the payee, could be shared with the police or tax office.
The Bank of Canada says they ‘need to innovate to stay in the game’, pushing for a digital currency. According to the bank cryptocurrencies are a threat to their power to implement monetary policy. On top of that cryptocurrencies might take away the central bank’s ‘lender of last resort’ role.
All central banks going crypto
All around the world central banks are looking at cryptocurrencies. They all see the benefits of a digital cryptocurrency over traditional money. ING Bank expects all central banks to issue a digital currency within the next three years.
Sweden is already an almost cashless society, so for them the step will be quite small. China is moving in the same direction. Switzerland already announced it will launch a central bank digital currency, while countries like The Marshall Islands are ahead of the game as well.
In Europe and the United States cash is still king. Even though some might argue that credit and debit cards are more popular. That’s probably why most central banks in the western world have been sleeping. The announcement of Libra has been a wake-up call to most of them. As a result Germany now wants a digital euro. In addition in the United States there are lawmakers who want a digital dollar.
But which bank will start using bitcoin as a currency? In the Ukraine they want to legalize bitcoin, so that’s a start.
Also published on Medium.