By Promit Mukherjee and David Ljunggren
OTTAWA, Dec 16 (Reuters) - The Bank of Canada says regulations on future Canadian stablecoins must ensure they are backed by high-quality liquid assets and be pegged one-to-one to a central bank currency, Governor Tiff Macklem said on Tuesday.
The Liberal government said in November that it would be introducing regulations next year for stablecoins, a form of cryptocurrency which are convertible to a fiat currency at par.
"We want stablecoins to be good money, like bank notes or money on deposit at banks," Macklem said.
"A stablecoin must be pegged at a one-to-one ratio to a central bank currency and be backed by high-quality liquid assets so that it can always be converted to cash at par," he told the Montreal Chamber of Commerce said.
High quality liquid assets are usually government-backed securities such as treasury bills and government bonds.
The conditions for redeeming stablecoins must be fully disclosed, including the timing and any fees that need to be paid, Macklem said.
Ottawa wants to bring Canada's financial system up to speed with many other advanced and developing economies - including the United States - which are tapping into the potential of cryptocurrences.
The legislation will help built trust in the system so that fiat-backed stablecoins are safe and secure for consumers and businesses to use, the finance ministry says. The central bank will be the regulator for the asset.
"The goal is to ensure Canadians can leverage the innovation of stablecoins and do so safely," said Macklem, making his final public appearance of the year.
Macklem said 2026 would see more innovation in the financial system as Canada modernizes its financial payments system.
This includes setting up Real-Time Rail, a payments system which will allow instant settlements among consumers and businesses in Canada as well as across borders.
The bank also intends to work on the implementation of an open banking system which will make it easier for consumers to compare and switch banks easily, he said.
((Reuters Ottawa bureau))
