The Bank of Canada is ‘scaling down’ plans for a possible digital loonie

For now, the Bank of Canada is shifting away from preparations for a possible central bank digital currency amid the lack of a 'compelling case' for the technology.

The Bank of Canada doesn’t see a “compelling case” to move forward with plans for a central bank digital currency (CBDC) after years of study, governor Tiff Macklem said Tuesday.

As part of the Bank of Canada’s mandate to oversee payment and currency frameworks for the country, the central bank since 2020 has been studying what a digital version of the loonie may look like as cryptocurrencies like Bitcoin garnered more mainstream attention.

Any potential decision to implement a digital loonie of some kind would be in the hands of Parliament, not the Bank of Canada.

Governor Tiff Macklem, speaking to the Institute of International Finance and the Canadian Bankers Association on Tuesday, said the central bank has built up “an extensive body of knowledge” about what it would take to implement a central bank digital currency in Canada.

But, for now, the Bank of Canada is shifting away from preparations for such a plan.

“Recognizing that there is not currently a compelling case to move forward with a CBDC in Canada, the Bank is scaling down its work on a retail central bank digital currency and shifting its focus to broader payments system research and policy development,” Macklem said.

He added that the Bank of Canada will continue to “monitor” global central bank digital currency developments and reiterated that it “will be ready to ensure Canadians always have a safe and secure supply of public money.”

Briefing notes acquired by the Canadian Press from January 2021 revealed officials warned Finance Minister Chrystia Freeland that the issuance of a central bank digital currency would entail “wide-reaching implications for the economy, the financial system” and the Bank of Canada’s operations.