In the latest crypto news, the Bank of Canada scales back CBDC efforts.
The Bank of Canada has officially dialed down its work on a retail CBDC, according to a recent update on its website. Although the statement didn’t mention its research into wholesale CBDCs, it did stress that this research is still ongoing.
So, why the pivot? It turns out, the Bank has bigger fish to fry. While the idea of a CBDC was seen as a “contingency plan” in case it became necessary, the focus is shifting towards broader issues in the payments ecosystem.
Moreover, the Bank stated it is reallocating resources to pressing matters such as policy development and improving the payments system.
One major reason for this shift is the rise of Payments Canada, which is working on the Real-time Rail system—an instant payment platform with over 100 members, including the Bank of Canada. This development promises to revolutionize retail payments.
Moreover, the Bank of Canada is preparing to take on a new regulatory role under the Retail Payment Activities Act of 2021. By November, it will start registering 2,500 smaller payment service providers, with operational risk standards being enforced by 2025.
This decision wasn’t made in isolation. The Bank collaborated with international heavyweights like the Bank for International Settlements and MIT’s Digital Currency Initiative. Their findings? Canadians aren’t all that eager for a CBDC, and there are concerns about the financial system’s readiness for it.
However, the Bank reassures that its research will still be valuable if, down the road, Canadians, through their elected officials, demand a digital dollar.
So, while the CBDC project is taking a back seat, the Bank of Canada isn’t abandoning the idea—it’s just focused on more urgent priorities.
