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CBDC: Central bank of Canada moves away from retail developments
By Daniele Corno
Bank of Canada moves away from retail CBDC to focus on broader research on payment systems
Central Bank of Canada's change of course
After years of research, the Central Bank of Canada has decided to reduce its involvement in the development of a retail CBDC, also known as the digital Loonie. This decision comes after the institution launched a study in 2017 to respond to the increasing digitization of payments.
In 2023, a consultation paper collected nearly 90,000 responses from concerned citizens, particularly about privacy and security.
The bank said the work done so far will be useful for possible future development if Canadians demand a digital dollar. It also confirmed that it is monitoring global CBDC retail developments and publishing related research.
Motivations behind the Bank of Canada's change of focus
The decision to halt the development of a retail CBDC is related to the need to focus resources on other priorities.
The Bank of Canada is now focusing on policies that can improve the domestic and global payment system.
This focus reflects a trend that has emerged in other nations as well. The Central Bank of Australia, for example, has chosen to invest in a wholesale CBDC, highlighting that the benefits of retail versions are limited. According to Brad Jones, RBA Assistant Governor, “the potential benefits of a retail CBDC appear modest or uncertain compared to the challenges it might introduce.”
This position suggests increasing caution in evaluating retail CBDCs, as the risks may outweigh the current benefits.
The global context and the future of the Canadian digital dollar
Although the retail CBDC project has been scaled back, the Bank of Canada will continue to closely monitor the evolution of CBDCs around the world.
Currently, more than 130 countries are exploring this possibility, while only three nations-the Bahamas, Jamaica, and Nigeria-have already launched an operational CBDC.
The Bank of Canada intends to ensure that the country maintains its monetary sovereignty. In the future, the institution may reevaluate its position if technologies or citizens’ needs change dramatically, remaining open to opportunities that may emerge as the financial landscape evolves.
