The Bank of Canada (BOC) has announced it will ease its research and development work on a retail-based central bank digital currency, shifting more focus towards payment systems and policy development. The announcement did not dismiss the idea of wholesale CBDC, underlining that studies and research were ongoing.
The BOC has intensely studied the possibilities and challenges of CBDCs, determining that devising a “contingency plan” was essential to tackling any unexpected events that could rise in the future. The switch in priorities comes as the Bank braces for new responsibilities and intensifying issues arising in several other payment frameworks.
Significantly, the Bank’s pivot does not suspend Canada’s pursuit of advanced payment systems; Payments Canada, a consortium that manages Canada’s payment clearing and settlement mechanism with over 100 members, includes the Bank of Canada. It continues to steer the creation of the Real-Time Rail payment system to facilitate retail transactions.
In parallel, the BOC is set to augment its surveillance of retail payments under the latest Retail Payment Activities Act, promptly registering small payment services providers and enforcing operational risk standards.
The BOC has previously aligned with the Bank for International Settlements and MIT Media Labs’ Digital Currency Initiative to expand its CBDC research. However, they found a lack of enthusiasm for CBDC among Canadians and flagged potential drawbacks that the new form of currency could introduce into the financial system and public life. Regardless of the shift in focus, the research conducted on CBDCs will serve as a valuable resource if Canadians ever decide they need or want a digital national dollar in the future.