According to local media The Logic, the Bank of Canada is considering developing a digital currency that will eventually completely replace fiat money.
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Government supports digital currency for more control
More than a decade ago, Bitcoin came out as a decentralized P2P currency system. It protects privacy and gets rid of government control. However, governments have gradually mastered the way to get along with this emerging “currency”. As the saying goes, "If you can't beat it, join it."
An article published by the Central Bank of Canada on the Internet called "Central Bank Money: The Next Generation" said that the central bank's issue of digital currency would have several benefits, such as it would allow sharing with tax authorities or the police. Personal data.
The Logic got the paper by requesting information, and it found that Bank of Canada was very cautious about developing its own digital currency to counter the "direct threat" of cryptocurrency. The article pointed out that the upcoming central bank digital currency will be widely used. Initially, it will be used in parallel with legal tender, but the digital currency will eventually become the only form of currency.
Many benefits of the central bank’s digital currency
The report was written by Stephen Murchison, a digital currency research consultant at the central bank of Canada's current central bank governor Stephen Poloz. After two years of in-depth analysis and research, Murchison concluded that the central bank's digital currency has multiple advantages. The contents of this document are as follows:
We need constant innovation to stay in the game. The central bank's digital currency will have all the benefits of central bank assets and make wireless electronic payments convenient and secure.
The report lists more than a dozen benefits of the central bank's digital currency, but has one drawback: digital currency "causes the risk of stable and low-cost financing of bank deposits."
However, the Bank of Canada official said it has not yet decided whether to introduce digital currency.
The Bank of Canada agrees that banknotes are gradually becoming obsolete. Faced with increasing pressure from cryptocurrencies, the central bank may need to accelerate.
The Bank of Canada stated in its report:
The cryptocurrency may directly threaten our ability to implement monetary policy and the role of the lender.
If the Bank of Canada's plan is successful, Canada is not the only country with a national digital currency. According to reports, the Republic of the Marshall Islands is pushing the national cryptocurrency last month.