Canada: COVID-19 Pandemic Forces Bank of Canada to Fast-Track CBDC Plans

Canada is reportedly accelerating its plans to launch a central bank digital currency (CBDC).

Fast-tracking the CBDC Plans

According to a report by Decrypt, the Bank of Canada is rethinking its timeline for the launch of the Canadian CBDC.

For those not in the loop, earlier this year, Timothy Lane, a deputy governor of the Bank of Canada had opined that Canada had no real need for a state-backed digital currency. However, at the same time, Lane added that Canada would develop a CBDC anyway, should a need ever arise.

Fast forward to December, and now Lane is of the opinion that CBDC plans might need to be accelerated courtesy of the COVID-19 pandemic that has brought the global economy to a standstill.

In a new interview, Lane stated:

“In February, we identified two scenarios that we would want to be prepared for.”

Adding:

“I would say that in the last nine months we’ve seen developments that look like they’re in the direction of some of those things coming to pass sooner than expected.”

For the uninitiated, back in February, Lane outlined two possible scenarios that could force Canada to issue its CBDC.

First, the declining usage of cash in Canada which is subsequently leading up to creating a new kind of economic disparity among the Canadians. The second reason involves cryptocurrencies. Specifically, it fears the excessive popularity of privately-issued cryptocurrencies such as Facebook’s infamous Libra, among others.

This, according to Lane, could lead to privacy concerns and even threaten Canada’s national currency. Supporting this assumption is economic research from the New York Federal Reserve that states that CBDCs would be a more private alternative to big-tech controlled digital currencies like Libra.

Pandemic to Blame

During the interview, Lane said the pandemic has made Canadians less inclined to use cash. However, if this change in behavioral pattern could outlast the COVID-19 pandemic remains to be seen.

“How much of that is temporary, just associated with the pandemic, and how much of it is the start of a new trend, I think, remains to be seen, but certainly that’s something we’re watching very closely,” Lane added.

Although not crystal clear conclusive, Lane’s comments suggest that Canada’s national bank is keeping a close eye on macro-economic developments that could indeed force it to hasten the CBDC plans.

In related news, BTCManager reported on October 29, that Canada had called for coordinated global cooperation on CBDC development.

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