The Canadian Central Bank has indicated that the prospects for widespread adoption of a central bank digital currency (CBDC) in daily transactions are currently limited because of the country’ mature payment ecosystem.
In a Staff Discussion Paper released on August 10, 2023, the Bank of Canada discussed the potential of CBDCs to address the “unmet payment needs” of Canadians. While recognizing the gaps in a minority segment of the country’s population, the paper emphasized that most Canadians enjoy access to a range of well-established payment methods, including cash transactions, bank accounts, debit and credit cards, as well as online payment services.
The Bank acknowledged that there might be some segments of the Canadian population that would benefit from the introduction of CBDCs. However, it claimed that it would be difficult to encourage the “widespread merchant acceptance” required for the payment method to be effective.
“For a payment-oriented CBDC to successfully address unmet payment needs, the main consumer groups—who already have access to a range of payment options—would have to widely adopt the CBDC and use it at scale,” the Bank asserted.
Interestingly, the Canadian government has taken an aggressive stance toward cryptocurrencies and related technologies. Several well-known cryptocurrency exchanges recently ceased their operations in Canada due to perceived unfavorable regulatory conditions. In April 2023, dYdX announced that it would gradually stop its services for Canadian users. Bybit and Binance also followed a similar announcement in May 2023.
However, in July 2023, Canada’s leading financial regulator, the Canadian Securities Administrators (CSA), issued a set of regulations addressing various aspects of digital asset companies operating within the country. These guidelines encompassed aspects like investment decisions, investor protection, custody of cryptocurrency assets, and crypto staking.
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