Digital currencies and fintech

• Unmet Payment Needs and a Central Bank Digital Currency

  Staff Discussion Paper 2023-15 Christopher Henry, Walter Engert, Alexandra Sutton-Lalani, Sebastian Hernandez, Darcey McVanel, Kim Huynh

  We discuss the payment habits of Canadians both in the current payment environment and in a hypothetical cashless environment.

  Content Type(s): Staff research, Staff discussion papers Research Topic(s): Bank notes, Central bank research, Digital currencies and fintech, Financial services JEL Code(s): C, C1, C12, C9, E, E4, O, O5, O54

• Cryptoasset Ownership and Use in Canada: An Update for 2022

  Staff Discussion Paper 2023-14 Daniela Balutel, Christopher Henry, Doina Rusu

  We find that Bitcoin ownership declined from 13% in 2021 to 10% in 2022. This drop occurred against a background of steep price declines and an increasingly tight regulatory atmosphere.

  Content Type(s): Staff research, Staff discussion papers Research Topic(s): Bank notes, Digital currencies and fintech, Econometric and statistical methods JEL Code(s): C, C8, C81, E, E4, O, O5, O51

• Privacy-Preserving Post-Quantum Credentials for Digital Payments

  Staff Working Paper 2023-33 Raza Ali Kazmi, Duc-Phong Le, Cyrus Minwalla

  Digital payments and decentralized systems enable the creation of new financial products and services for users. One core challenge in digital payments is the need to protect users from fraud and abuse while retaining privacy in individual transactions. We propose a pseudonymous credential scheme for use in payment systems to tackle this problem.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Central bank research, Digital currencies and fintech, Payment clearing and settlement systems JEL Code(s): E, E4, E42, G, G2, G21, O, O3, O31

• Crowdfunding and Risk

  Staff Working Paper 2023-28 David Cimon

  Crowdfunding may enable unique products to reach the consumer market. I model a crowdfunding technology that publicly screens consumer demand early in the production process. In this model, entrepreneurs like crowdfunding for risky projects where demand is uncertain, but not for large, safe projects or for projects where production costs are uncertain.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Digital currencies and fintech, Financial markets, Financial services JEL Code(s): G, G2, G21, G24, G3, G32
• May 8, 2023

  Bank of Canada launches public consultations on a digital dollar

  Media Relations Ottawa, Ontario

  The Bank of Canada is launching an online public consultation on the features that could be included in a digital Canadian dollar.

  Content Type(s): Press, Press releases Research Topic(s): Digital currencies and fintech

• A central bank digital currency for offline payments

  Staff Analytical Note 2023-2 Cyrus Minwalla, John Miedema, Sebastian Hernandez, Alexandra Sutton-Lalani

  Offline functionality is a key consideration for a potential CBDC. We describe the different types of offline functionality based on their duration outside of network connection—either intermittent (for short periods) or extended (for longer periods). We discuss the advantages and drawbacks of each and consider implications for end-user devices, system resilience and universal accessibility.

  Content Type(s): Staff research, Staff analytical notes Research Topic(s): Central bank research, Digital currencies and fintech JEL Code(s): E, E4, E42, E5, E51, E58, O, O3, O31

• On the Fragility of DeFi Lending

  Staff Working Paper 2023-14 Jonathan Chiu, Emre Ozdenoren, Kathy Yuan, Shengxing Zhang

  We develop a dynamic model to capture key features of decentralized finance lending. We identify a price-liquidity feedback: the market outcome in any given period depends on agents' expectations about lending activities in future periods, with higher future price expectations leading to more lending and higher prices in that period.

  Content Type(s): Staff research, Staff working papers Research Topic(s): Digital currencies and fintech, Financial stability JEL Code(s): G, G0, G01, G1, G10

• Central Bank Digital Currencies and Banking: Literature Review and New Questions

  Staff Discussion Paper 2023-4 James Chapman, Jonathan Chiu, Mohammad Davoodalhosseini, Janet Hua Jiang, Francisco Rivadeneyra, Yu Zhu

  We review the nascent but fast-growing literature on central bank digital currencies (CBDCs), focusing on their potential impacts on private banks. We evaluate these impacts in three areas of traditional banking: payments, lending and liquidity and maturity transformation. We also take a broader look at CBDCs and highlight two promising directions for future research.

  Content Type(s): Staff research, Staff discussion papers Research Topic(s): Central bank research, Digital currencies and fintech, Financial institutions, Financial stability JEL Code(s): E, E5, E50, E58, G, G0, G00, L, L0, L00

• The 2021–22 Merchant Acceptance Survey Pilot Study

  Staff Discussion Paper 2023-1 Angelika Welte, Joy Wu

  The rise in digital payment innovations has spurred a discussion about the future of cash at the point of sale. The Bank conducted the 2021–22 Merchant Acceptance Survey Pilot Study to study trends in merchant cash acceptance and monitor conditions for the potential issuance of a central bank digital currency.

  Content Type(s): Staff research, Staff discussion papers Research Topic(s): Bank notes, Digital currencies and fintech, Econometric and statistical methods JEL Code(s): C, C8, D, D2, D22, E, E4, L, L2

• 2021 Methods-of-Payment Survey Report

  Staff Discussion Paper 2022-23 Christopher Henry, Matthew Shimoda, Julia Zhu

  We present results from the 2021 Methods-of-Payment Survey, including updated payment shares. We highlight long-term trends and provide additional context for results with respect to the COVID-19 pandemic.

  Content Type(s): Staff research, Staff discussion papers Research Topic(s): Bank notes, Coronavirus disease (COVID-19), Digital currencies and fintech, Financial services JEL Code(s): D, D8, D83, E, E4, E41