Timothy Lane, Deputy Governor of the Bank of Canada and Research Head of the bank’s fintech and cryptocurrencies department, said that the bank has seen developments in the plans regarding the launch of a central bank digital currency (CBDC).

Lane added that the bank might go ahead with a sooner than expected launch of a digital currency. The recent statement by the deputy governor indicates a change in tone regarding CBDC’s. Earlier in February this year, Lane said that “there is not a compelling case to issue a CBDC at this time.”

The member of the bank’s governing council outlined that the coronavirus pandemic has significantly reduced the use of cash, and the bank is frequently conducting surveys on payments behavior to keep up with the developments regarding evolving payment trends.

“In February, we identified two scenarios that we would want to be prepared for. One of them was the disappearance of the acceptance of cash, and the second was the emergence of digital currencies that might turn out to be disruptive in some way or might undermine Canada’s monetary sovereignty. I would say that in the last nine months we’ve seen developments that look like they’re in the direction of some of those things coming to pass sooner than expected. In particular, we’ve seen a shift away from the use of cash transactions much more rapidly than previously we thought was likely,” Lane said during a conversation at the centre for international governance innovation.

Urgency

The Bank of Canada has always emphasized ‘no urgency’ regarding the issuance of a CBDC in the past. But, the recent comments show that the bank might go ahead with the digital currency plans in the coming years. Lane said that even if the Bank of Canada falls behind ECB and the Chinese Central Bank in the issuance of a CBDC, the bank can learn lessons from the early movers.

“We’ve said that there’s a sense that definitely things are moving ahead more quickly. Although we don’t know how long they’re going to persist, it’s more urgent for us to make sure that we’re ready if we have to be ready. So, our work definitely has to move forward,” Lane added.