News on October 16, according to the Vancouver Sun in Canada, Bank of Canada Governor Stephen Poloz and the bank’s board of directors discussed central bank digital currency in an internal speech. According to the introduction, the Bank of Canada may consider launching an digital currency to help it fight the "direct threat" of cryptocurrency. This digital currency is endorsed by the central bank and has the convenience and security of electronic payment.
The central bank digital currency will initially coexist with coins and banknotes and eventually replace them entirely. The digital currency will offer “all the benefits” of a central bank-backed asset, along with “all the convenience and security of wireless, electronic payments.”
More than ten years ago, Bitcoin came out as a decentralized P2P currency system. It protects privacy and is free from government control. However, governments are gradually learning how to deal with this new "currency". As the saying goes, "If you can't beat it, join it."
An article titled "The Next Generation of Central Bank Currency" published online by the Bank of Canada stated that issuing a digital currency by the central bank would have several benefits, such as it would allow personal data to be shared with tax authorities or the police.
The Logic, which obtained the document through an access-to-information request, found that the Bank of Canada is seriously considering developing its own digital currency to combat the “immediate threat” of cryptocurrencies. The article points out that the upcoming central bank digital currency will be widely used. Initially, it will be used in parallel with fiat currencies, but digital currencies will eventually become the only form of currency.
The report was written by Stephen Murchison, central bank digital currency research advisor to current Bank of Canada Governor Stephen Poloz. After two years of in-depth analysis and research, Murchison concluded that central bank digital currencies have multiple advantages. The document reads: "We need to continue to innovate to stay in the game. Central bank digital currencies will have all the benefits of central bank assets and make wireless electronic payments convenient and secure."
This report lists central bank digital currencies With more than a dozen benefits, there is only one drawback: digital currencies “pose risks to stable and low-cost financing of bank deposits.” However, the Bank of Canada officially stated that it has not yet decided whether to launch a digital currency.
The report lists more than a dozen benefits of a central bank digital currency, but has only one drawback, which is that digital currencies "pose risks to stable and low-cost financing of bank deposits."
The Bank of Canada agrees that banknotes are becoming obsolete. Central banks may need to step up in the face of growing pressure from cryptocurrencies. The Bank of Canada stated in its report: Cryptocurrencies may directly threaten our ability to conduct monetary policy and our role as lender of last resort.
If the Bank of Canada’s plan succeeds, Canada won’t be the only country to have a national digital currency. Last month, it was reported that the Republic of the Marshall Islands was moving forward with a national cryptocurrency.
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