- **Bank of Canada's CBDC Study:**
A #Bank of Canada discussion paper reveals that most Canadians have little incentive to use a central bank-issued digital currency (CBDC) due to their widespread access to existing financial services.
- **Research Context:**
The paper, published on August 10th, explores a hypothetical scenario where cash usage is minimized to examine the role of a #CBDC in assisting the underbanked population.
- **Limited Incentives for CBDC Adoption:**
The study found that Canadians already possess extensive access to #financial services, with high percentages having bank accounts (98%), credit cards (87%), and good internet connectivity (90%). As a result, the "weak incentives" to adopt a CBDC stem from the accessibility of existing services.
- **Drawbacks of CBDC Replacement for Cash:**
The paper pointed out that replacing cash with a digital currency could disadvantage those less comfortable with technology and leave cash-dependent individuals unable to make everyday transactions. Furthermore, low CBDC #adoption could discourage merchants from accepting it, undermining its utility.
- **Alternative Solutions:**
Instead of a CBDC, the paper suggested alternatives to support the underbanked, including improving internet access, expanding low-cost bank account availability, promoting merchant cooperation in remote communities, and maintaining cash distribution.
- **Acknowledgement of Varied Reactions:**
While the paper recognized that some individuals might be interested in using a CBDC for different reasons, it highlighted substantial barriers to broad CBDC adoption by both users and merchants.
- **Importance of Cash:**
The #study emphasized the ongoing significance of physical cash, noting its vital role in providing offline payment options during emergencies like extreme weather or power outages. This reiterates the Bank of Canada's commitment to ensuring cash accessibility and availability as long as demand persists.