The Bank of Canada is considering issuing its own digital currency to combat the “direct threat” emanating from cryptocurrencies.
The central bank has already made a presentation about the initiative to the bank’s manager Stephen Poloz and the to the others directors. It says that at first the coin can be used on a par with cash, and then completely replace it.
“We need to innovate in order to stay in the game” – the presentation authors noted.
The initiative has a number of advantages and only one drawback, the report says. In particular, a digital currency may pose risks for “stable, low-cost financing of banks (deposits)”.
In addition, using the new asset will make it much easier to collect information about Canadians’ spending. The data obtained is also proposed to transfer to the police or tax office.
Digital currency can be created based on tokens or a bank account. The Central Bank of Canada noted that the use of banknotes is generally becoming obsolete, which creates problems for the entire banking system.
If the regulator refuses banknotes, this will not affect the bank’s ability to pursue a monetary policy or act as a creditor. However, the authors of the presentation believe that cryptocurrencies can threaten this ability.
Nevertheless, the decision to issue its own digital currency by the central bank has not yet been finalized, the Central Bank noted.