The Bank of Canada has dismissed any potential threat posed by Bitcoin to its national currency.
As part of testimony in the Senate banking committee, top officials have indicated that it’s premature to tell if it will take off . Governor Stephen Poloz said, “These are early days … and so far digital currencies have not made it to what we call money.” Thus, there is little reason to worry about them when it comes to financial policy.
His second in command, Tiff Macklem, who is leaving the bank, was more blunt on the issue. He said that Bitcoin is certainly in no position to threaten their currency right now and may never be in the future.
He noted that this isn’t the first time people are calling money’s downfall:
“I started with the bank in 1984 … and through my entire career at the bank the demise of cash has been much predicted….Cash has been remarkably durable, even with the introduction of credit cards and debit cards and tap-and-go cards. If you look at the growth of cash in the economy, it’s grown roughly in line with the growth of nominal income.”
If it did take off, he said, it would certainly affect the bank’s balance sheet, their ability to regulate the money supply and maintain financial stability.
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He did concede though that the technology has what to offer, especially when it comes to international payments:
“There are certain applications of some sort of global currencies which could be quite helpful, for instance payments of remittances, which can be quite expensive”.
The comments come in the wake of the Royal Canadian Mint’s announcing its divestiture from Mintchip, which now faces an uncertain future after more than two years of development. Those hoping for an obstacle-free advancement of cryptocurrency in Canada may have to wait, especially if its marriage to fiat is called off.
Canada vs U.S.
At first glance, it’s tough to tell much of a difference between the neighboring countries’ attitudes toward digital currency and their prospects of seeing it flourish one day in the future. Both have issued similar warnings and have similar requirements vis-à-vis licensing for things like money transfer.
Figures in both central banking authorities have expressed strong faith in the currencies they manage. In contrast, perhaps one can point to Ben Bernanke’s somewhat upbeat comments on Bitcoin, that it “may hold long-term promise”. More significantly, Canada has taken a far more stringent stance by closing bank accounts of bitcoin-related businesses.
What comes to mind is that Canada may be in a far better position, politically, to adopt a negative position. They avoided the brunt of the recent financial crisis, which has been attributed to the U.S.’s fiscal policy in the years prior and whose after-effects have been felt in multiple rounds of quantitative easing.
The Bitcoin community has thus leveraged the alleged unending money printing to advance its cause, which cannot be said for Canada who has continued to maintain one of the world’s most stable financial systems. Without reading too much into it, perhaps one can argue that Canada can better afford to snub Bitcoin these days.