Bank of Canada: Coronavirus could accelerate central bank digital currency

Plans for a central bank digital currency (CBDC) in Canada could be accelerated due to the coronavirus pandemic, according to the country’s central bank.

The Bank of Canada said the global health crisis had hastened the urgency of the development of its state-backed digital currency, which could now come sooner than previously envisaged. However, the bank was keen to point out that it was not yet a “foregone conclusion” that a CBDC would be issued.

Bank of Canada Deputy Governor Tim Lane was quoted by Reuters saying the bank was analyzing the circumstances that might see it launch a digital currency.

“For several years, the Bank of Canada has been analyzing which circumstances might lead Canada to decide to issue a digital currency. The pandemic may bring us to a decision point sooner than we had anticipated…A digital currency is by no means a foregone conclusion.”

Noting the progress being made in other countries, including China, towards a CBDC, Lane said he could see a scenario where a foreign central bank digital currency could come to be used in Canada.

“We can certainly imagine a situation where other central banks would launch a digital currency that could come to be used increasingly in Canada…If that were to happen… that could start to threaten the role of the Canadian dollar.”

However, he noted that digital currencies such as BTC were not “plausible” as an alternative to fiat for the future.

“Cryptocurrencies such as [BTC] do not have a plausible claim to become the money of the future. The recent spike in their prices looks less like a trend and more like a speculative mania.”

The comments could suggest the central bank is looking to progress the pace of work on its digital currency, with the prospect of further trials in the near future.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

See also: CoinGeek Live panel, The Future of Banking, Financial Products & Blockchain