Bank of Canada Shifting Away From CBDC
23 Sep, 2024 ● Crypto News
The Bank of Canada (BOC) is reducing its efforts on developing a retail central bank digital currency (CBDC), according to a recent update on its website.
While the update did not address the status of a wholesale CBDC, it highlighted that the bank's research in this area would continue.
The BOC has conducted extensive research into CBDCs but is now shifting its focus to other priorities.
Previously, the BOC maintained that a CBDC was part of a "contingency plan" for potential future use. This shift in focus comes as the bank prepares to take on new responsibilities. The BOC stated:
“With other payments issues gaining prominence, the Bank is scaling down its work on a retail central bank digital currency and shifting its focus to broader payments system research and policy development.”
Meanwhile, Payments Canada, which oversees the country’s payment clearing and settlement system, continues to develop the retail-focused Real-time Rail payment system.
Payments Canada has more than 100 members, including the BOC.
Additionally, the BOC is preparing to increase its oversight of retail payments under the Retail Payment Activities Act of 2021.
Under this legislation, the central bank will begin registering 2,500 small payment service providers in November, which were previously only required to comply with Anti-Money Laundering regulations, and will start enforcing operational risk standards in 2025.
The BOC has collaborated on CBDC research with the Bank for International Settlements and the Massachusetts Institute of Technology's Media Labs Digital Currency Initiative.
The BOC’s own research has ranged from conceptual studies to more practical evaluations.
It found repeatedly that the Canadian public showed little interest in a CBDC, and introducing such a currency could present new challenges for the financial system and the public.
Despite the shift in focus, the BOC noted that its CBDC research “will be invaluable if, at some point in the future, Canadians, through their elected representatives, decide they want or need a digital Canadian dollar.”
Sources:
https://cointelegraph.com/news/bank-canada-halts-retail-cbdc-focuses-payment-systems
https://www.bankofcanada.ca/2020/02/contingency-planning-central-bank-digital-currency/#8-Conclusion
https://www.bankofcanada.ca/research/digital-currencies-and-fintech/research/
