- The Bank of Canada ends its seven-year plan to develop a digital currency, shifting focus to broader payment trends.
- The central bank will concentrate on modernizing payment systems while monitoring global digital currency developments.
Following seven years of extensive research and analysis, the Bank of Canada has decided to stop its ambitions to build a central bank digital currency (CBDC). This momentous action signals that the bank will no longer pursue a digital Loonie, at least in the near future.
The decision indicates a shift in the bank’s priorities, which will now be centered on tracking larger payment system trends and addressing domestic and international payment concerns.
Despite the fact that its CBDC plans were halted, the research completed over these years is still relevant and could serve as a basis if future interest in a digital currency arises.
#BREAKING: The Bank of Canada has announced that it will be DROPPING its plan to create a BoC-regulated digital currency after years of consideration. pic.twitter.com/GB3oBQYAHx
— Canada Proud (@WeAreCanProud) September 20, 2024
Canada Prioritizes Payment Infrastructure Over Digital Currency
One of the primary reasons for this decision is that the Bank of Canada has chosen to focus on more critical payment-related issues. Notably, the bank is poised to take on additional obligations under the Retail Payment Activities Act, highlighting the significance of prioritizing the country’s payment infrastructure.
By refocusing its efforts, the Bank of Canada hopes to address new issues in the payments sector and ensure that it can react to changing trends. As a result, the central bank will remain vigilant over global digital currency developments, closely monitoring how the digital currency area evolves around the world.
It’s interesting to note that the Bank of Canada is still actively involved in Payments Canada’s Real-time Rail (RTR) payment project despite leaving the CBDC effort.
This system promises to improve the speed and efficiency of retail payments across the country, possibly benefiting over 100 Payments Canada members, including the Bank of Canada.
The RTR project is an important step toward modernizing the country’s payment infrastructure, and it could serve as a successful alternative to the CBDC by providing Canadians with more payment alternatives and capabilities.
While the Bank of Canada has taken a more cautious approach to CBDCs, other regions are making bold efforts to define their position on digital currencies. For example, as we previously reported, Louisiana has passed HB 488, a law aimed at defending Bitcoin’s rights while explicitly prohibiting the implementation of CBDCs.
This legal action is part of a larger push to encourage investment and economic growth through Bitcoin mining. Louisiana’s approach demonstrates a divergent stance toward digital assets, advocating decentralized cryptocurrencies over state-controlled digital currencies.
Meanwhile, on a global scale, several central banks continue to experiment with CBDC solutions. One significant example is the Swedish central bank’s engagement with blockchain platforms Algorand and Hedera, which have been examined for future retail CBDC applications, according to CNF.
