After years of research, the Bank of Canada has announced that it is “scaling down” its efforts regarding a retail central bank digital currency (CBDC).
The Bank has collaborated with commercial lenders to explore the creation of a distributed ledger technology (DLT)-based CBDC and its potential effects on the economy and financial system. During the pandemic, work on this initiative accelerated in response to the impact of Covid-19 on cash usage. Despite this, the Bank previously indicated that a digital loonie was not a “forgone conclusion.” More recently, a Bank discussion paper raised questions about the utility of a CBDC in addressing unmet payment needs in an increasingly cashless society.
Now, the Bank states it is refocusing its efforts on broader research and policy development related to the payments system. It further commented that the insights gained over the years will be crucial if, at some point in the future, Canadians decide through their elected representatives that a digital Canadian dollar is necessary.