Bank of Canada Reluctant to Issue CBDC: Deputy Governor
- The regulator’s decision will be based on the success of private players in the sector.
At a time when many monetary regulators are exploring the concept of central bank digital currency (CBDC), the Bank of Canada has no intention to issue one, at least with the present scenarios.
Revealed by the central bank deputy governor Timothy Lane in a speech titled “Money and Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term in the Digital Age,” the regulator is not seeing any benefits of releasing such digital currencies unless the competitors take cash off the market.
“We have concluded that there is not a compelling case to issue a CBDC at this time. Canadians will continue to be well-served by the existing payment ecosystem, provided it is modernized and remains fit for purpose,” Lane said.
The challenger is stablecoin, not Bitcoin
He, however, believes that widespread adoption of private digital currencies might force the monetary regulator to reconsider its decision on issuing CBDC.
“Stablecoins have better prospects for widespread adoption—and, correspondingly, greater potential to further transform the world of money and payments,” he added.
The deputy governor particularly pointed out Facebook’s Libra and its potential to challenge the present monetary system. However, he has doubts about whether Libra can pass regulatory scrutiny.
“The most prominent example is Libra, a stablecoin that Facebook, along with an association of other companies, is planning to launch,” Lane said. “Libra would run on an existing messaging platform with strong brand recognition. This would give it the potential to reach billions of people—including many with little or no access to banks or financial services.”
“It’s tough to predict if Libra will ever live up to its promises or even come into existence. But it is a good example of a transformative technology that affects how the Bank needs to respond to the future of money.”
Despite the deputy governor’s firm statement, Bank of Canada is one of the participants in a Japan-led consortium of major central banks, which was formed to study the feasibility of issuing CBDC.
The Canadian regulator also piloted cross-border, cross-currency payments using Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Read this Term technology along with its Singaporean counterpart.
At a time when many monetary regulators are exploring the concept of central bank digital currency (CBDC), the Bank of Canada has no intention to issue one, at least with the present scenarios.
Revealed by the central bank deputy governor Timothy Lane in a speech titled “Money and Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term in the Digital Age,” the regulator is not seeing any benefits of releasing such digital currencies unless the competitors take cash off the market.
“We have concluded that there is not a compelling case to issue a CBDC at this time. Canadians will continue to be well-served by the existing payment ecosystem, provided it is modernized and remains fit for purpose,” Lane said.
The challenger is stablecoin, not Bitcoin
He, however, believes that widespread adoption of private digital currencies might force the monetary regulator to reconsider its decision on issuing CBDC.
“Stablecoins have better prospects for widespread adoption—and, correspondingly, greater potential to further transform the world of money and payments,” he added.
The deputy governor particularly pointed out Facebook’s Libra and its potential to challenge the present monetary system. However, he has doubts about whether Libra can pass regulatory scrutiny.
“The most prominent example is Libra, a stablecoin that Facebook, along with an association of other companies, is planning to launch,” Lane said. “Libra would run on an existing messaging platform with strong brand recognition. This would give it the potential to reach billions of people—including many with little or no access to banks or financial services.”
“It’s tough to predict if Libra will ever live up to its promises or even come into existence. But it is a good example of a transformative technology that affects how the Bank needs to respond to the future of money.”
Despite the deputy governor’s firm statement, Bank of Canada is one of the participants in a Japan-led consortium of major central banks, which was formed to study the feasibility of issuing CBDC.
The Canadian regulator also piloted cross-border, cross-currency payments using Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tampe Read this Term technology along with its Singaporean counterpart.