Deputy Governor of the Bank of Canada (BOC), Tim Lane, has declared that although there is “not a compelling case” for a central bank digital currency (CBDC), the Bank of Canada is working on a prototype.
The BOC has set out a plan to consult with a number of stakeholders, saying:
The Bank of Canada would design it to provide the benefits of cash—safe, easy to access, private and a good store of value—but in a digital version that consumers could use to buy things electronically online or in person at a shop.
On cryptocurrencies in general, Mr Lane said:
If one or more alternative digital currencies threatened to become used widely as an alternative to the Canadian dollar, then a central bank issued digital currency could be used to defend monetary sovereignty.
Canada joins a growing number of central banks considering whether to issue their own digital currency within the next few years.
However, Lane remains adamant in his concern for the increased adoption and widespread use of cryptocurrencies.
He described cryptocurrencies as:
A monopoly that would erode competition and privacy and pose an unacceptable challenge to Canadian monetary sovereignty.
He noted Libra as the most obvious threat, saying:
It’s tough to predict if Libra will ever live up to its promises or even come into existence. But it is a good example of a transformative technology that affects how the bank needs to respond to the future of money.
It is clear that the BOC has chosen to sit back and witness from afar how Libra develops overtime and whether it will indeed serve its purpose of "banking the unbanked." or whether it will enjoy adoption in the well banked western world. One thing seems clear, central bankers are being forced to pay more attention now and take small steps now, to be ready if projects like Libra take a giant leap.