Deputy Governor Timothy Lane explains how the Bank of Canada is preparing for a future where Canadians may need a digital currency issued by their central bank. He also discusses the important work underway to make sure our current payment system is modernized and working well.
Watch Deputy Governor Lane speak to the CFA Montreal FinTech RDV 2020. Read the full speech.
Central bank digital currency? Not yet.
Canadians are well-served by the existing payment ecosystem, so we believe there is no need for the Bank of Canada to issue its own digital currency at this time. But the world can change very quickly, so we need to get ready in case one is needed.
The Bank of Canada can imagine scenarios in which we would consider issuing a CBDC so we can continue to provide Canadians with trustworthy methods of payment.
Planning for a digital version of cash
Two scenarios could warrant an introduction of a digital currency by the Bank of Canada:
- If the use of physical cash is reduced or eliminated altogether, leaving some Canadians left out
- If private cryptocurrencies make serious inroads, creating concerns about privacy and handing control of payments to private companies
In these scenarios, Canadians and their government could decide we need a central bank digital currency (CBDC). The Bank of Canada would design it to provide the benefits of cash—safe, easy to access, private and a good store of value—but in a digital version that consumers could use to buy things electronically online or in person at a shop.
As we prepare for a possible future digital currency, we want to start a discussion of what it might look like in Canada. In doing so, the Bank will consult widely to answer questions such as:
- What design features might make a CBDC attractive for merchants and users?
- How would a digital currency work with other methods of payment?
- How would a CBDC work for cross-border transactions?
- How can we protect privacy while preventing illicit uses?
As the world changes, the Bank will continue to fulfill its mandate to support secure, reliable and efficient payment options that benefit all Canadians.
We continue to support cash and bank deposits
While Canadians are increasingly finding new ways to pay for things or transfer money, digital currencies—even ones issued by central banks—won’t replace cash or bank deposits. The Bank of Canada will make sure bank notes are available to Canadians who want to use them. We must also bring the existing payment system up to date and address problems with cross-border transactions.
The goal is to provide consumers, businesses and financial institutions with a modern, fast and convenient payment system.