(Kitco News) – A future filled with central bank digital currencies (CBDCs) may seem like a foregone conclusion for some, with the Atlantic Council reporting that “134 countries and currency unions, representing 98% of global GDP, are exploring a CBDC.” But as the Bank of Canada just showed, nothing is guaranteed, as they have put the creation of a digital Canadian dollar on hold for the time being.
As reported by CBC News, after several years of exploring the various facets of launching a digital currency in Canada, the central bank has decided to put its investigations on hold.
“The Bank of Canada [BoC] confirmed to CBC News it has shifted its focus away from the idea of introducing a digital Canadian dollar, which could be used for online purchases and money transfers,” journalists Kyle Bakx and Meegan Read wrote.
The BoC’s investigation into the creation of a digital Canadian dollar began in 2017 as the central bank looked to respond to rising digitalization and changes in how Canadians make purchases. In 2022, they launched a public consultation process to get input from the community.
Over the past summer, the BoC released a staff discussion paper that recommended Canada launch its own digital currency to maintain monetary sovereignty and financial stability, among other reasons, as digital payments continue to see rising adoption while cash falls out of favor.
But creating a digital loonie now appears to be less of a priority as the BoC explores other avenues to support digital payments.
“The Bank has undertaken significant research towards understanding the implications of a retail central bank digital currency, including exploring the implications of a digital dollar on the economy and financial system, and the technological approaches to providing a digital form of public money that is secure and accessible,” the BoC said in an email to CBC News.
The report indicated that the central bank will instead focus on “preparing for the ongoing evolution of payments both in Canada and around the world, through policy research and analysis.”
Canada is not alone in its hesitation to launch a retail CBDC to the public as, while 134 countries are exploring the possibility, only three countries have fully launched one – the Bahamas, Jamaica, and Nigeria – none of which are major economies on the global stage.
“One of the things that this cryptocurrency revolution has brought to the forefront is that we need to do more innovation,” Karl Schamotta, chief market strategist with Corpay, told CBC News. “But at the same time, we also need to preserve safety and many of the features of the monetary system that have been created over centuries and tested out over time.”
For that reason, Schamotta said a digital loonie doesn't offer many advantages right now, so he's not surprised the central bank has cooled its enthusiasm.
That said, several notable countries, including China, India, and Russia, are well along in the process of pilot-testing their respective digital currencies with their populations and are expected to expand their programs in the future. Earlier this week, Russia announced that it plans to have digital ruble services for the general public available at all major banks in the country by July 2025.
