Pandemic may speed arrival of digital currency
WINDOW SHRINKS FOR CRYPTOCURRENCY WORK: BOC
Pandemic-related shifts in how people shop, sending more people into cyberspace than a physical space, means central banks must speed up work on creating their own digital currencies, says a top Bank of Canada official.
COVID-19 has meant more people are shopping online, and foot traffic for brick-andmortar storefronts hasn’t caught up to prepandemic levels for many small and mediumsized businesses.
Bank of Canada deputy governor Timothy Lane said that shift in spending habits coupled with the speed of technological developments has narrowed the window to deliver a digital currency issued by the central bank.
“This is all looking a lot more urgent because of the speed with which technology is evolving and particularly, I think, with COVID we’ve seen an acceleration of the shift of activities online,” Lane said during the webinar.
“That suggests that if we want to be ready to develop any kind of digital central bank product, we need to move faster than we thought was going to be necessary.”
The comments from an online panel on Wednesday are a shift from late February, just before the pandemic struck, when Lane suggested the timeline to create a digital currency was long.
He suggested on Wednesday that many central banks still believe there isn’t a compelling case for them to immediately issue a central bank-backed digital currency, but circumstances are changing rapidly.
Just this week, the Financial Stability Board, an international group that counts the Bank of Canada and the federal Finance Department as members, issued recommendations on how authorities should regulate “stablecoins” backed by currency holdings.
“The world is changing so quickly that if we want to have something that’s actually viable, and could be launched in a suitable timeframe, we need to be moving pretty quickly and deliberately to develop something,” Lane said during the panel hosted by the Reinventing Bretton Woods Committee and the Chamber of Digital Commerce.