After five years of research, Canada is set to abandon its plan to launch a central bank digital currency (CBDC). Instead, Canada plans to focus on broader retail payment and policy development.
Canada first announced its research on CBDC in 2019 and held a public consultation in 2022.
Bank of Canada Pauses Digital Dollar Plans
The Canadian Central Bank, in a research paper released earlier this year, claimed a digital Canadian dollar would help citizens maintain financial stability and monetary sovereignty. This comes amidst a drastic decline in the use of cash in Canada.
Confirming the change of plans, a document titled “Digital Canadian Dollar” said, “With this work completed, and with other payments issues gaining prominence, the Bank is scaling down its work on a retail central bank digital currency and shifting its focus to broader payments system research and policy development.”
The Bank of Canada have abandoned their plans to implement a Central Bank Digital Currency
This is HUGE! pic.twitter.com/MZR3nMyT2l
— The Pleb 🇨🇦 Reporter (@truckdriverpleb) September 21, 2024
Although the central bank did not provide any reason for its sudden change from a CBDC, separate research claims that a CBDC would result in a 12% decline in bank deposits if implemented.
The proposed CBDC would have served as a retail CBDC. This means Canadians could be able to use it for their daily expenses and transactions. However, the central bank told CBC News it would “continue to monitor global retail CBDC developments and publish some related research.”
Canadians are Against a Digital Dollar
Even though economists claim CBDCs are important to the economy, the idea of a digital Canadian dollar has yet to catch on with many Canadians, according to polls. Data from the central bank in November 2023 showed that 80% of those surveyed were firmly against the Bank of Canada’s research and development of a digital dollar.
Bank of Canada Shelves CBDC.
Some of the best Canadian twitter accounts are busy with realtors b/sing about rate cuts right now so I’ll say this.
This is a win. May it collect dust and be an example to the world as an utter failure.
TL:DR Reasons why CBDC is bad:
-…
— RedemptionTrade (@RedemptionTrade) September 20, 2024
Additionally, key individuals in Canadian politics, including Pierre Poilievre, leader of the Conservative Party, strongly oppose the concept of a CBDC. Poilievre argues that it could result in “politicized banking” and pose privacy risks. He instead advises Canadians to invest in cryptocurrencies like Bitcoin to safeguard their wealth amid rising inflation in Canada.
Reports claim that most major economies have moved away from their CBDC plans in 2024. The UK and Australia have shifted their focus from launching retail CBDCs to more research and wholesale CBDCs, respectively.
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