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Bank of Canada Is Considering Digital Money, Official Says |
| Source: |
itbusiness.ca |
| Source Date: |
Friday, November 14, 2014 |
| Focus: |
ICT for MDGs
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| Country: |
Canada |
| Created: |
Nov 18, 2014 |
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Even though the Bank of Canada is concerned about the economic risks of a deregulated currency like Bitcoin, it’s been looking into whether it could issue its own version of digital currency.
According to a story published in the Financial Post on Thursday, Carolyn Wilkins, the senior deputy governor of the Bank of Canada, said the central bank is “working through the tough issues today so that we can support the benefits of innovation.”
Here’s what you need to know:
- The Bank of Canada started its own review of payment systems in Canada, eventually concluding the institution needs to take a stand and start overseeing some of these payment systems, according to Wilkins.
- This isn’t the first time the central bank has had to deal with innovation. For example, Wilkins pointed to developments like credit cards, which came out in the 1970s. More recently, there have been e-transfers and online banking tools on offer, but all of these services require bank accounts to access them. What’s different about digital currency is that there’s no need to have a bank account, or even to reveal a user’s identity.
- The Bank of Canada estimates that right now, about 340 merchants in Canada accept Bitcoin, arguably the most well-known digital currency out there. However, the bank fears Canadian consumers who are currently hanging onto their digital currency may later face problems spending it, if merchants start refusing to accept it. And if digital currency ever became mainstream enough, the Bank of Canada would have less power to “influence macroeconomic activity through Canadian interest rates,” Wilkins said.
- If the Bank of Canada were to issue its own digital currency, it wouldn’t be too novel an endeavour. In 2013, the Royal Canadian Mint was working on its own digital currency, branded as MintChip. The MintChip would have allowed users to spend Canadian dollars using debit and credit machines. However, the Mint ended up selling the MintChip project in April.
(By Candice So)
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Bank of Canada Is Considering Digital Money, Official Says Even though the Bank of Canada is concerned about the economic risks of a deregulated currency like Bitcoin it’s been looking into whether it could issue its own version of digital currency
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