The Bank of Canada is considering the launch of its own digital currency. According to an internal presentation by the Bank of Canada titled “Central Bank Money: The Next Generation” the entity is considering launching a proprietary digital currency to fight the direct threat of cryptocurrencies to the bank’s “ability to implement monetary policy and lender of last resort (LOLR) role”, among other things.
The presentation, prepared for Governor Stephen Poloz and the bank’s board of directors by Stephen Murchison, who is leading the bank’s digital currency research, was presented at a September 2018 board meeting as part of a two-year research project to define if the bank should issue a digital currency of its own, and it was obtained via an access-to-information request by Canadian news outlet The Logic.
The proposal defines the virtual currency as widely available and with the prospect of eventually replacing coins and paper money in the country, suggesting two deployment options for the currency, token-based and account-based, to fight the problem of banknotes going obsolete: “the time may come that merchants/banks find it too costly to accept banknotes.”
The presentation mentions that a digital currency has the potential to provide the benefits of a central bank-backed asset with the “convenience and security of wireless, electronic payments”. In terms of security, it also acknowledges the ability of digital currencies to collect information that is not possible to collect when people use cash, information that “could be shared with police or tax authorities”. However, when asked about the latter, spokesperson Louise Egan told The Logic that sharing that information is “among the many issues that continue to be assessed by Bank researchers”.