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Gold is an 'antique instrument'; This is why Canada sold all its gold reserves - former BOC head David Dodge

Kitco News

(Kitco News) - Gold is an outdated commodity, and the Bank of Canada was right to get rid of its gold reserves.

That's according to David Dodge, former Governor of the Bank of Canada and Senior Advisor at Bennett Jones LLC.

Dodge spoke with David Lin, Anchor and Producer at Kitco News.

The Bank of Canada is Canada's central bank, comparable to the Federal Reserve in the United States.

Starting in the early 2000s, the Bank of Canada sold its gold reserves. Canada is currently the only G7 nation without any official gold holdings.

"[The] issue is quite clear, that it costs to hold gold, whereas holding U.S. or Chinese or Euro bonds yields you a return," said Dodge. "…That was a strong view. And a view that our international monetary system was in a place that was sufficiently robust, that holding this antique instrument of stability called 'gold' really didn't make any sense."

Dodge also said that Bitcoin has no place in the Bank of Canada's balance sheets. However, he did not reject cryptocurrencies completely.

"But the issue of digital currencies is a very important issue," he remarked. "… [What] we would like to do, globally and [in Canada], is to reduce transaction costs… [The] Bank and the Department of Finance are working hard… on this issue of digitalizing our financial system to reduce transaction costs… The financial system is interested in digitizing the Canadian dollar."

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The Bank of Canada and the Massachusetts Institute of Technology's Digital Currency Initiative lab is currently collaborating on a 12-month research project on CBDCs.

Dodge added that while some may "fear" that CBDCs would infringe on privacy and increase government tyranny, digitalization means more efficiency.

"If we're going to have efficient delivery of financial services to people, we're going to need a strong digital ID to enable those transactions to take place," he said. "We're going to have to find a political way to overcome that fear [of government control through digital IDs] in order to benefit from a health system that works better, a financial system that works better, and indeed, an economic system that works better."

To find out Dodge's predictions for the Canadian economy, watch the above video.

Follow David Lin on Twitter: @davidlin_TV

Follow Kitco News on Twitter: @KitcoNewsNOW

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.