Money and payments

The digital age is reshaping the very nature of money and payments. Our research aims to ensure Canadians have access to safe, reliable and convenient forms of payment—including cash—now and into the future.

Recent technological advancements have paved the way for new payment options and new participants in the payments ecosystem, a trend that will certainly continue to shape how people buy things and transfer funds in the coming years. These innovations can make financial services more efficient and cheaper to deliver to Canadians. But they also increase risks, such as fraud and data breaches.

This is why our research is so critical. We study how the rise of digital currencies and electronic payments affects our ability to fulfill our core functions, including keeping inflation on target, promoting financial stability and issuing bank notes that Canadians can trust.

Examples of areas we are researching:

  • the payment innovations that could have the biggest impact on demand for cash in the future
  • ways to ensure Canadians can continue to access and pay with cash as patterns of cash use shift
  • the reasons why cross-border payments are expensive and slow
  • how to balance the speed and convenience of the retail payment system with risks like fraud and data breaches
  • the benefits and pitfalls of integrating tokenized assets into payment systems

Cash and bank notes

The Bank is the sole issuer of bank notes in Canada, and we want Canadians to use these notes with confidence and pride. And, in fact, they do: even with new and innovative payment methods available, cash still accounts for one out of every five transactions at the point of sale. We consistently examine the demand for and use of cash, as well as its accessibility and acceptance within the economy. This requires an understanding of current trends and emerging challenges, including developments in cryptoassets and financial technology (fintech).

Payments

The Bank is committed to understanding and shaping the evolving landscape of payment options to ensure Canadians benefit from any changes. As new technologies and payment service providers emerge, we conduct research to address challenges such those related to cross-border transactions, access to central bank payment systems and the prospective design and structure of the payments ecosystem. Additionally, we are assessing how the Bank’s new role supervising retail payments service providers fits within this broader context. Our research informs policy development and regulatory oversight with the end goal of delivering better outcomes for Canadians.

Related research

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What happens after Governing Council sets the policy interest rate: Inside the implementation framework that makes monetary policy work

Staff analytical paper 2026-45 Kaetlynd McRae
Setting the target rate is the most visible part of monetary policy, but the monetary policy implementation framework is what helps ensure that decision is reflected in financial markets. Through the design and use of its tools and facilities, the Bank of Canada helps keep short-term market interest rates close to the policy target, while preserving incentives for market participants to trade and actively manage liquidity.
Content Type(s): Staff research, Staff analytical paper JEL Code(s): E, E4, E41, E42, E5, E51, E52, E58 Research Theme(s): Financial markets and funds management, Funds management, Monetary policy, Monetary policy framework and transmission, Monetary policy tools and implementation, Money and payments, Payment and financial market infrastructures

Liquidity Optimization in Gross Settlement Systems with Quantum Reordering: Application to TARGET2∗

Staff working paper 2026-32 Valerio Astuti, Adriano Baldeschi, Luca Bastianelli, Giuseppe Bruno, Riccardo Russo, Ajit Desai, Danica Marsden
Building on our earlier quantum algorithm, this paper shows that reordering queued payments can significantly reduce liquidity needs. The algorithm performs well on smaller payment batches, while traditional algorithms can process larger batches and deliver greater savings. Machine learning also helps identify which payment patterns offer the greatest potential for improvement.
Content Type(s): Staff research, Staff working papers JEL Code(s): C, C6, C61, C63, C8, C83, E, E4, E42, E5, E58 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Money and payments, Payment and financial market infrastructures

Merchant Access to Cash: Going the Extra Kilometer?

Staff analytical paper 2026-41 Angelika Welte, Stephen Wild, Patrick Fogaing kouamo
In this study, we measure SMBs’ access to cash using the driving distance to financial institution (FI) branches. First, we measure the distance between SMBs and the nearest FI branch. Second, we use a sample of 651 SMBs from the 2023 Merchant Acceptance Survey to examine SMBs’ banking choices.
Content Type(s): Staff research, Staff analytical paper JEL Code(s): D, D8, D83, E, E4, E41 Research Theme(s): Money and payments, Cash and bank notes, Retail payments

2025 Methods-of-Payment Survey Report: Cash in an Increasingly Digital and Mobile Economy

Staff analytical paper 2026-36 Marie-Hélène Felt, Saika Pacouloute, Angelika Welte
The 2025 Methods-of-Payment Survey provides insights into how Canadians pay for their day-to-day purchases and how they use cash (i.e. banknotes and coins). While contactless card payments dominate in-person transactions, most Canadians maintain favourable views on cash and still hold and use it. They are also increasingly adopting mobile payments.
Content Type(s): Staff research, Staff analytical paper JEL Code(s): D, D8, D83, E, E4, E41 Research Theme(s): Money and payments, Cash and bank notes, Retail payments

Data Externalities, Market Power, and the Optimal Design of Central Bank Digital Currencies

Staff working paper 2026-21 Yuteng Cheng, Jonathan Chiu, Mohammad Davoodalhosseini, Janet Hua Jiang
This paper studies how a central bank should design a CBDC when private payment providers collect and monetize transaction data. It characterizes the optimal CBDC’s pricing and data policy, and shows how its effects on private payment use and total data depend on market power and data externalities.
Content Type(s): Staff research, Staff working papers JEL Code(s): G, G2, L, L1, L14 Research Theme(s): Money and payments, Digital assets and fintech, Payment and financial market infrastructures, Retail payments
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Disclaimer

Bank of Canada staff produce research and analysis to support the work of the Bank and to advance knowledge in the fields of economics and finance. The research is non-partisan and evidence based. All research is produced independently from the Bank’s Governing Council. The views expressed in each paper or article are solely those of the authors and may differ from official Bank of Canada views.

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