Bitcoin Awareness, Ownership and Use: 2016–20
In this paper, we examine trends in Canadian ownership of Bitcoin and other cryptocurrencies from 2016 to 2020 using data from surveys conducted by the Bank of Canada.
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
Cash and COVID-19: What happened in 2021
Staff discussion paper 2022-8
Heng Chen,
Walter Engert,
Kim Huynh,
Daneal O’Habib,
Joy Wu,
Julia Zhu
Using data from the Bank Note Distribution System and consumer surveys, we find that bank notes in circulation remained high through 2021. Canadians continued to rely on electronic methods of payment, but a significant share also continued using cash for payments.
Content Type(s):
Staff research,
Staff discussion papers
JEL Code(s):
C,
C1,
C12,
C9,
E,
E4,
O,
O5,
O54
Research Theme(s):
Money and payments,
Cash and bank notes,
Retail payments
Equilibrium in Two-Sided Markets for Payments: Consumer Awareness and the Welfare Cost of the Interchange Fee
Staff working paper 2022-15
Kim Huynh,
Gradon Nicholls,
Oleksandr Shcherbakov
We construct and estimate a structural two-stage model of equilibrium in a market for payments in order to quantify the network externalities and identify the main determinants of consumer and merchant decisions.
Content Type(s):
Staff research,
Staff working papers
JEL Code(s):
C,
C5,
C51,
D,
D1,
D12,
E,
E4,
E42,
L,
L1,
L14
Research Theme(s):
Models and tools,
Econometric, statistical and computational methods,
Money and payments,
Payment and financial market infrastructures,
Retail payments
Macroeconomic Predictions Using Payments Data and Machine Learning
Staff working paper 2022-10
James Chapman,
Ajit Desai
We demonstrate the usefulness of payment systems data and machine learning models for macroeconomic predictions and provide a set of econometric tools to overcome associated challenges.
Content Type(s):
Staff research,
Staff working papers
JEL Code(s):
C,
C5,
C53,
C55,
E,
E3,
E37,
E4,
E42,
E5,
E52
Research Theme(s):
Models and tools,
Econometric, statistical and computational methods,
Monetary policy,
Real economy and forecasting,
Money and payments,
Retail payments
Dynamic Privacy Choices
Staff working paper 2022-8
Shota Ichihashi
Consumers often express concerns about lack of privacy, but they still give up a lot of data to digital platforms. This paper builds a dynamic game-theoretic model of data collection and privacy protection, which potentially explains consumers’ behaviour.
Content Type(s):
Staff research,
Staff working papers
JEL Code(s):
D,
D8,
D82,
D83
Research Theme(s):
Models and tools,
Economic models,
Money and payments,
Digital assets and fintech
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.