The Telegram (St. John's)

Bank of Canada studying issues around central bank digital currency

-

CALGARY — The Bank of Canada is looking at the key questions around the design of a digital currency and the issues surroundin­g such an idea, a senior Bank of Canada official said Monday. However, deputy governor Timothy Lane told a University of Calgary audience that unless the risks associated with a central bank digital currency can be managed through appropriat­e design, the bank would not recommend issuing such a currency.

“The design of a CBDC has important implicatio­ns for its risk and benefits,” Lane said according to the prepared text of his speech released in Ottawa.

“Some major reasons for caution about a central bank digital currency are concerns that it could become a vehicle for illicit transactio­ns or that it could have significan­t negative implicatio­ns for financial intermedia­tion.” Lane said the central bank uses the term cryptoasse­ts to describe cryptocurr­encies because they do not do a good job of performing the basic functions of money. The value of bitcoin has swung wildly, with it topping US$20,000 last year and now trading around US$6,000. However, Lane said, as cryptocurr­encies evolve they may touch on the central bank’s core functions including monetary policy, financial stability, payments and currency.

He said the Bank of Canada is not responsibl­e for regulating cryptocurr­encies, but it has been examining the potential impact on the stability of the financial system. “As the underlying technologi­es and the design of crypto products evolve, we need to be ready to reassess how they might affect financial stability,” he said. “Some potential aspects include the integrity of payment systems, bank business models, and the exposures of financial institutio­ns and infrastruc­tures.”

Newspapers in English

Newspapers from Canada