Canada’s central bank, the Bank of Canada, appears to be moving away from developing a Central Bank Digital Currency (CBDC).
The idea, commonly called digital Loonie, a digital version of the Canadian dollar, now seems on a backtrack. This comes after seven years of active research and analyzing the risks that comes with introducing a digital currency
The central bank initially began exploring the concept in response to the growing digitization of payments. However, according to a CBC news report, it now seems less inclined to push forward with the project.
Shifting Focus from Digital Currency to Global Payment Trends
The Bank of Canada has not made any official announcement regarding the pause in its digital currency research.
A spokesperson acknowledged that substantial research had been conducted on the implications of a retail CBDC. Meanwhile, the Reserve Bank of Australia (RBA) recently confirmed it won’t pursue the retail CBDC anytime soon.
In lieu of developing a digital currency, the bank opted to redirect its focus to examining payment system trends, both within Canada and internationally.
CBDC Gains Momentum Globally
This shift in focus comes amid the backdrop of global momentum in digital currency development. Intriguingly, many countries, including central banks are increasingly interested in exploring and creating digital forms of currency.
Recent data from the Atlantic Council disclosed that 134 countries, representing 98% of the global economy, are currently exploring CBDCs. Out of these nations, 44 are actively piloting digital currencies.
Furthermore, over 65 countries, including major economies like India, Australia, and Brazil, are in advanced stages of exploring CBDCs. In addition, countries such as the United Kingdom, Taiwan, France, UAE are either in development, pilot programs, or nearing launch of the CBDC initiative.
Canada Confronts Political Pushback Amid Global CBDC Expansion
In Canada, opposition to CBDCs has grown, with Conservative Leader Pierre Poilievre voicing strong resistance to their development.
In mid-August, Poilievre pledged to safeguard cash usage and prevent government-led economic digitization. He backed Bill C-400, introduced by House of Commons member Ted Falk, which aims to ban the introduction of a central bank digital currency in Canada. This move reflects a growing political debate around the potential risks and benefits of CBDCs in the country.
This sentiment was shared by the North Carolina Governor, Roy COoper has he vetoed House Bill 690 in July. This bill was an effort to ban the state from effecting a U.S. federal reserve-issued CBDC.
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