Covid Accelerates Bank of Canada Digital Currency Plan

EDITOR NOTE: Not quite a year ago, Canada began work on developing a central bank digital currency (CBDC) to prepare for the likelihood that fiat-backed “stablecoins” might begin spreading in terms of global adoption and circulation. The Covid pandemic accelerated those plans, as cash usage in Canada dropped significantly as digital transactions rose. We’ve said this many times before and we’ll say it again. If cash were to be abolished, the adoption of CBDCs would hand central banks total power over not only currency but a sovereign nation’s entire economy. Central banks can manipulate the value of the currency at will should it choose to, and it can even impose negative rates to force people into spending. Fintech may offer innovative solutions to improve customer experience, but it's also an aggressive means toward controlling citizens’ wealth and transactional behaviors. Ultimately, when cash exits, aggressive forms of intrusion, intervention, and surveillance enter through the virtual door. Their target? Your money and financial data. Keep your money safe from monetary debasement and data risks by investing in non-CUSIP gold and silver.

The Bank of Canada has accelerated work on a central bank digital currency (CBDC) in response to Covid-19 and its impact on cash usage, says a senior official who nevertheless cautions that a digital loonie is still not a "forgone conclusion".

A year ago, deputy governor Timothy Lane stated that the central bank had no plans to issue its own digital currency at that time, but said this could change if cash usage dropped off significantly or private options such as bitcoin or the Facebook-backed Diem gain widespread adoption.

In a speech this week, Lane says that the bank's view remains unchanged. However, the pandemic has had an impact on cash usage, with both shoppers and merchants more hesitant to use paper money.

With Covid-19 accelerating the transition to a digital economy, "our work to prepare for the day when Canada might want to launch a digital loonie—backed by the Bank—has also accelerated," says Lane.

The deputy governor is less concerned with private e digital currencies, saying that the likes of bitcoin "do not have a plausible claim to become the money of the future".

He continues: "They [cryptocurrencies] are deeply flawed as methods of payment—except for illicit transactions like money laundering, where anonymity trumps all other features—because they rely on costly verification methods and their purchasing power is wildly unstable."

In contrast, stablecoins could see widespread adoption for payments but none "is near that point yet".

Originally posted on Finextra