Digital currencies and fintech

• Digital Payments: A Framework for Inclusive Design

  Staff Discussion Paper 2024-15 Sebastian Hernandez, Alexandra Sutton-Lalani, John Miedema, Virginie Cobigo, Fatoumata Bah, Munazza Tahir, Danika Lévesque, Badr Omrane

  We propose a framework for designing cognitively accessible payment and banking interfaces through design guidelines, testing and proposed measures to optimize system learnability and user workload. We include, as a case study, the results of testing this framework with users with cognitive disabilities, using a prototype system for voice payments.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Accessibility, Bank notes, Central bank research, Digital currencies and fintech, Digitalization, Financial services

• Ecosystem Models for a Central Bank Digital Currency: Analysis Framework and Potential Models

  Staff Discussion Paper 2024-13 Youming Liu, Francisco Rivadeneyra, Edona Reshidi, Oleksandr Shcherbakov, André Stenzel

  This note analyzes different economic models of a central bank digital currency (CBDC) ecosystem where the central bank chooses different levels of market involvement and usage of policy levers. The analysis suggests that there are trade-offs between the costs to the central bank and its ability to achieve policy goals like universal access.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Central bank research, Digital currencies and fintech, Financial services JEL Code(s): E, E5, E58, E6, E61, L, L5

• Central Bank Digital Currency and Transmission of Monetary Policy

  Staff Working Paper 2024-27 Saroj Bhattarai, Mohammad Davoodalhosseini, Zhenning Zhao

  How does the transmission of monetary policy change when a central bank digital currency (CBDC) is introduced in the economy? Does CBDC design matter? We study these questions in a general equilibrium model with nominal rigidities, liquidity frictions, and a banking sector where commercial banks face a leverage constraint.

  Content Type(s): Staff research, Staff working papers Topic(s): Digital currencies and fintech, Interest rates, Monetary policy, Monetary policy framework, Monetary policy transmission JEL Code(s): E, E3, E31, E4, E5, E50, E58, G, G2, G21, G5, G51

• The Ecology of Automated Market Makers

  Staff Discussion Paper 2024-12 Annetta Ho, Cosmin Cazan, Andrew Schrumm

  This paper describes the ecology of automated market makers, which are the most popular decentralized exchange model for the pricing and trading of crypto assets within decentralized finance.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Digital currencies and fintech, Financial markets, Financial stability, Financial system regulation and policies JEL Code(s): G, G1, G2

• The Role of Public Money in the Digital Age

  Staff Discussion Paper 2024-11 Francisco Rivadeneyra, Scott Hendry, Alejandro García

  A well-functioning monetary system is characterized by public and private forms of money that exchange at par as value flows freely between them. A relevant retail public money—whether in the form of cash, a central bank digital currency or both—is a necessary component of such a monetary system.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Central bank research, Digital currencies and fintech, Payment clearing and settlement systems JEL Code(s): E, E4, E42, E5, E50, E58

• Untapped Potential: Mobile Device Ownership and Mobile Payments in Canada

  Staff Working Paper 2024-25 Marie-Hélène Felt, Angelika Welte, Katrina Talavera

  We present a two-stage model of mobile phone and mobile payment usage that controls for selectivity. This reveals unobserved factors that work against having a mobile phone and toward mobile paying. Therefore, people who are unable to acquire or choose not to own a mobile device might have unmet payment needs.

  Content Type(s): Staff research, Staff working papers Topic(s): Bank notes, Digital currencies and fintech, Econometric and statistical methods JEL Code(s): C, C3, C39, D, D1, D12, E, E4, E42

• Analysis of DeFi Oracles

  Staff Discussion Paper 2024-10 Xun Deng, Sidi Mohamed Beillahi, Cyrus Minwalla, Han Du, Andreas Veneris, Fan Long

  Oracles are constructs used in decentralized finance to price assets relative to each other. However, oracles contain defects that could lead to manipulation attacks. Such attacks exploit pricing models embedded within oracles to defraud creators and users. We automatically verify defects, which if mitigated, improves the security of digital currency.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Central bank research, Digital currencies and fintech, Payment clearing and settlement systems JEL Code(s): E, E4, E42, E5, E51, G, G1, G15, O, O3, O31

• 2023 Methods-of-Payment Survey Report: The Resilience of Cash

  Staff Discussion Paper 2024-8 Christopher Henry, Matthew Shimoda, Doina Rusu

  We present key results from the 2023 Methods-of-Payment Survey. Results show that measures of cash management and use have remained stable since 2020, and that Canadians increased their adoption of payment alternatives such as mobile apps in 2023.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Bank notes, Digital currencies and fintech, Financial services JEL Code(s): D, D8, D83, E, E4, E41

• The Role of Beliefs in Entering and Exiting the Bitcoin Market

  Staff Working Paper 2024-22 Daniela Balutel, Christopher Henry, Jorge Vásquez, Marcel Voia

  We develop a model that links investors’ decisions to enter or exit the Bitcoin market with their beliefs about the survival of Bitcoin. Empirical testing using Canadian data reveals that beliefs strongly influence both entries and exits, and this impact varies with time and ownership status.

  Content Type(s): Staff research, Staff working papers Topic(s): Bank notes, Digital currencies and fintech, Econometric and statistical methods JEL Code(s): D, D8, D83, E, E4, E41, O, O3, O33
• May 30, 2024

  Future-proofing our payments systems

  Speech summary Ron Morrow Payments Canada SUMMIT Toronto, Ontario

  Executive Director of Payments, Supervision and Oversight Ron Morrow talks about how payments have evolved in Canada and why it’s important to modernize our payment infrastructure.

  Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Bank notes, Digital currencies and fintech, Payment clearing and settlement systems, Retail payments supervision