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130 Results

Stablecoin Assessment Framework

Staff Discussion Paper 2021-6 Alejandro García, Bena Lands, Dennis Yanchus
We offer relevant authorities a three-step assessment framework they can use to understand, identify and quantify the risks associated with stablecoin and other cryptocurrency arrangements.
February 10, 2021

Payments innovation beyond the pandemic

Remarks (delivered virtually) Timothy Lane Institute for Data Valorisation Montréal, Quebec
Deputy Governor Timothy Lane talks about how the Bank of Canada is contributing to the modernization of our payments ecosystem, and how the COVID-19 pandemic has highlighted the need to make payments more convenient for all Canadians.

Distributional Effects of Payment Card Pricing and Merchant Cost Pass-through in Canada and the United States

Although credit cards are more expensive for merchants to accept than cash or debit cards, merchants typically pass through their costs evenly to all customers. Along with consumer card rewards and banking fees, this creates cross-subsidies between payment methods. Because higher-income individuals tend to use credit cards more than those with lower incomes, our results indicate that these cross-subsidies might lead to regressive distributional effects.

Estimating Policy Functions in Payments Systems Using Reinforcement Learning

We demonstrate the ability of reinforcement learning techniques to estimate the best-response functions of banks participating in high-value payments systems—a real-world strategic game of incomplete information.

Eggs in One Basket: Security and Convenience of Digital Currencies

Staff Working Paper 2021-6 Charles M. Kahn, Francisco Rivadeneyra, Tsz-Nga Wong
Digital currencies store balances in anonymous electronic addresses. This paper analyzes the trade-offs between the safety and convenience of aggregating balances in addresses, electronic wallets and banks.

Using Payments Data to Nowcast Macroeconomic Variables During the Onset of COVID-19

Staff Working Paper 2021-2 James Chapman, Ajit Desai
We use retail payment data in conjunction with machine learning techniques to predict the effects of COVID-19 on the Canadian economy in near-real time. We find this approach yields a significant increase in forecasting precision over a linear benchmark model. This model can help policy-makers before official data are released.

Safe Payments

In a cashless economy, would the private sector invest in the optimal level of safety in a deposit-based payment system? In general, because of externalities, the answer is no. While the private sector could over- or under-invest in safety, the government can use taxes or subsidies to correct private incentives.