Bank of Canada sees CBDCs as a threat to financial stability

Launching central bank digital currencies (CBDCs) could be a risky step for states, threatening their financial stability. This is stated in the отчете Bank of Canada.

Experts say that before issuing a digital currency, any central bank should analyse the consequences of such a move. The authors of the report urge particular attention to secure storage of assets and the use of electronic wallets.

The regulator fears that CBDC holders will create a multitude of storage locations to spread assets, complicating regulation. Digital currencies could also intensify competition between crypto exchanges and traditional banks in the battle for users.

Experts acknowledge risks of fraud and vulnerabilities in the code of platforms handling CBDCs. An additional problem, according to the bank, is posed by users themselves — they may lose private keys.

The bank proposes limiting the number of digital currencies that can be added to crypto platforms or wallets, developing a list of requirements for service providers, and establishing liability for loss of funds in a manner similar to fiat.

Earlier, the Bank of Canada said it was not ready to issue a CBDC. But the regulator did not completely abandon the idea, explaining that the project could be implemented if cash is phased out or widespread use of private digital assets.

As reported, the Bank of Canada was among the first central banks to begin researching CBDC prototypes. In June, experts concluded that privacy protocols needed to be enhanced for deployment in digital currencies.

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