Bank of Canada signals potential acceleration of CBDC rollout

The need for the Bank of Canada to issue its own digital currency could come sooner than expected, said Deputy Governor Timothy Lane in an interview.

In February he said that in the central bank do not see compelling arguments in favour of issuing a digital currency (CBDC). Lane outlined two scenarios that could lead to this: the public turning away from cash usage and the widespread adoption of private digital currencies.

According to a member of the bank’s board, “some of these things are happening earlier than expected”.

“In particular, we have observed a withdrawal from cash usage much faster than we previously thought. How temporary this is and whether it’s simply pandemic-related or the start of a new trend remains to be seen, but this is something we are certainly watching closely,” Lane noted.

He added that the regulator is intensifying monitoring of these phenomena, and the working group continues to prepare for the CBDC launch. He did not specify a concrete timeline for the deputy governor.

“In any case, a substantial amount of time will be required to complete the task, as it is necessary to ensure that all the necessary functioning technologies are in place, security is ensured, there are legal agreements, and everything else that needs to be done properly,” he stressed.

In addition, it is necessary to understand all the risks CBDC poses to the financial system, he clarified.

According to Lane, of the seven central banks belonging to the BIS-hosted group studying CBDCs, the Bank of Canada and the Swedish central bank have progressed the most on this topic.

Earlier, the Bank of Canada noted that launching a CBDC could be a risky step for countries, which could jeopardise their financial stability. The regulator also urged countries to coordinate approaches to the development of a digital currency.

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