Bank of Canada Accelerating Its Consideration Of A “Digital Loonie”
We have previously flagged the growing threat of private digital currencies to official (paper) currency. In a recent speech the Deputy Governor of the Bank of Canada confirmed that the Bank is accelerating its consideration of the role and form of an official digital currency. This is the result of the declining use of cash during the pandemic and the rise of private digital currencies whether cryptocurrencies or stablecoin. Central Banks are very wary of private digital currencies which they consider volatile and too deeply flawed to be used as a unit of account (in everyday transactions) like official currency. No decision is imminent on a “digital loonie” however; studies are underway on what an official digital currency (technology) ecosystem would look like. Central banks all over the world are getting ready to compete with or rein in the wild west of private digital currencies. Official control of monetary policy is at stake. There are also privacy concerns arising from ceding control over vast amounts of private (financial) data to private currency issuers.
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