According to a news report from the Canadian Broadcasting Corporation on September 18, after deeply studying the potential of digital currency, the Bank of Canada chose to suspend the CBDC project that began in 2017 and turn to in-depth research.
This decision reflects Canada's cautious attitude towards current financial stability, while also retaining flexibility for possible market changes in the future. As central banks around the world continue to explore CBDCs, the global financial system may usher in new changes.
Bank of Canada puts digital currency project on hold
In a 2022 public consultation, the Bank of Canada collected feedback on the possible use cases of the digital Canadian dollar, its security features, and the public's accessibility and privacy concerns about digital currencies, and ultimately decided to suspend its CBDC project in 2024.
A subsequent report from the agency, released in November 2023, purportedly highlighted that while Canadians were aware of CBDCs, surveys showed that most were conservative about using a digital Canadian dollar due to concerns about cybersecurity threats and privacy, among other issues.
In a subsequent online survey, nearly 87% of respondents said they would never use a digital Canadian dollar. Another 92% said they would not choose a CBDC over existing payment methods under any circumstances.
The survey showed that 87% of respondents were concerned about the security of digital currency. Despite this, the central bank made it clear that the digital Canadian dollar is intended to assist rather than replace cash in order to optimize the efficiency of online transactions.
At the same time, in the report, the central bank has also been paying attention to cybersecurity threats, including the long-term challenges that quantum computing may bring, and how to ensure the integrity of the CBDC system and prevent risks such as "double payment".
Therefore, the Bank of Canada decided to focus on policy research to adapt to the evolution of payment methods and ensure the security and efficiency of the financial system.
Global central banks show strong interest in CBDCs
Although the Bank of Canada has decided to suspend its CBDC project, which began in 2017, global interest in CBDCs continues to grow. Meanwhile, countries such as the Bahamas, Jamaica, and Nigeria have fully launched their own CBDCs and are working to expand their use.
According to the Atlantic Council’s CBDC Tracker, as of September 2024, 134 countries and monetary unions around the world (accounting for 98% of global GDP) are exploring central bank-issued digital currencies.
Some industry observers also said that the adoption of CBDC projects has been increasing due to geopolitical events such as Russia and Ukraine. There are currently 13 cross-border projects underway, including the mBridge project that connects banks in China, Thailand and other countries.
China’s digital yuan pilot remains the world’s largest, with total transactions expected to reach 7 trillion yuan (986 billion U.S. dollars) by June 2024, four times last year’s total, the report said.
The above data show that although CBDC is still controversial in different countries, the exploration of CBDC is still being actively promoted globally.
Conclusion:
Each country's choice is based on its specific economic conditions, financial stability considerations, and predictions of the future financial landscape. As global central banks deepen their research and practice in the field of CBDC, we are expected to witness a series of innovative solutions to reshape and innovate traditional currency and payment systems.
In the process of promoting CBDC globally, central banks still face challenges including interoperability of cross-border payments, maintenance of financial stability and protection of user privacy. These challenges require the concerted efforts of global central banks, the private sector, international organizations and academia.
I believe that in the future, with the continuous advancement of technology and the deepening of international cooperation, CBDC is expected to play a more important role in the global financial system and contribute to promoting the inclusiveness and sustainable development of the global economy.
