CENTRAL BANK OF CANADA PREPARING JUST IN CASE
Contrary to the overwhelming voice of CBDC support in the UK or Sweden, which are actively testing their digital currency, the Canadian approach is a little more cautious.
Deputy Governor Tim Lane spoke yesterday in Montreal. He said he saw no good reason to immediately issue a CBDC because Canadians were "well served" by the current payment system.
Nevertheless, the bank is actively investigating the potential requirements and features of the digital currency "if a decision is made to issue it." He also released a prototype plan for CBDC Canada.
This is not the first time the Bank of Canada has announced its desire to create its own digital currency. But, as Bloomberg notes, this is the first time that the bank is moving towards active prototyping, not just research.
In addition to writing several papers on the potential impact of CBDC, Canada joined a coalition of six major central banks last month to discuss how to deal with the growing threat from corporate coins such as Libra. But unlike the Bahamas, China and other countries that have thrown their hat in the ring, the Canadian digital dollar could be a few more years away.
WORLD CENTRAL BANKS TERRIFIED BY LIBRA
If this latest Canadian news proves something, it means that the central banks of the world are outraged by Libra. While some take a more proactive approach, others calmly observe or prepare for action.
According to the Bank for International Settlements (BIS), 80% of the world's central banks are already working on some CBDC initiative. This is 10% more than in previous years.
According to Lane, the Bank of Canada is considering two possible scenarios in which it will need to create its own digital currency. This happened in a situation where cash was completely liquidated, or when Canadians became increasingly popular among private cryptocurrencies. He said:
In both scenarios, there would be an argument for the Bank of Canada to step in… If one or more alternative digital currencies threatened to become used widely as an alternative to the Canadian dollar then a central bank-issued digital currency could be used to defend monetary sovereignty.