Last February, a deputy governor of the Bank of Canada, Timothy Lane, stressed that Canada does not need a digital currency, but it will develop one whenever required.
Lane has suggested that the need would be arising sooner than the Bank expected.
“While we don’t know what the future may bring,” said Lane at a FinTech conference last February, “we need to move forward to work out what a potential CBDC might look like and how it could be managed if the decision were ever taken to issue one.”
At the conference, he outlined two scenarios that can prompt Canada’s government to issue the CBDC that they have been working on. The first will have to do with physical cash being phased out of Canadian society, creating a new kind of economic disparity.
The second one involved cryptocurrencies becoming popular, creating privacy concerns, or threatening Canada’s national currency. Economic research from the New York Federal Reserve had supported the idea that CBDCs will be a more private alternative to a giant-company controlled digital currencies like Libra.
Lane stated in a new interview that the first precondition could be met sooner than he thought. “In February, we identified two scenarios that we would want to be prepared for.”
Lane addressing the Centre for International Governance Innovation, added that,
“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.”
He focuses on the first of the two scenarios, saying that the pandemic made Canadians less inclined to use cash; whether this development may outlast COVID-19, Lane is not sure:
“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.”
It is non-conclusive, but the comment suggested that Canada’s national Bank is taking a hard look at the CBDC plan it put forth last February.
“There’s a sense [that] definitely things are moving ahead more quickly,”
He continued,
“Although we don’t know how long they’re going to persist, it’s more urgent for us to make sure that we’re ready if we have to be ready. So, our work has to move forward.”
Lane is not alone in asking how long the economic aftershocks will persist; luckily, the banks’ CBDC contingency plan is still in place.
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