Canada doesn’t want “surprises” in terms of central bank digital currencies. In a recent interview with Reuters, the Governor of the Bank of Canada, Tiff Macklem, doubled the country’s contingency plan approach to CBDCs, stressing that he currently sees no urgent need to issue one.
For Macklem, interstate competition and coordination remains the central issue when issuing CBDC. He told reporters:
“If another country has one and we don’t, it could certainly cause some problems. So we want to make sure we’re ready. Currencies move across borders and so we certainly don’t want to be surprised by another country.”
To that end, Macklem said Canada is working with its G7 partners to ensure that information, planning, and possible CBDC timelines are shared.
The country has had a joint CBDC research project, Project Jasper, underway since 2017, which focused on central bank wholesale applications for digital money. Jasper specifically participated in experiments with distributed ledger technologies through public-private collaboration that included R3, Accenture, J.P. Morgan Chase, the Monetary Authority of Singapore, and the Bank of England, among others.
Canada has recently sought talent for the potential development of a CBDC, signaling its interest in working with candidates who have an in-depth understanding of existing private cryptocurrencies and their underlying technologies. Aside from other central banks taking the initiative, the Bank of Canada also sees stable private sector coins like the Libra as a potential trigger that would justify getting the ball rolling with the issue of CBDC.
From this perspective, Canada is joining the euro zone and the United States in their aggressive stance on Facebook’s ambitions for digital currencies.
By far the most ambitious and significant step in the CBDC landscape is China’s digital yuan, which has already been tested in major cities and major economic regions. While this has certainly sparked talk of a geopolitically charged CBDC race, some countries remain skeptical that the first mover will necessarily have an advantage.
Dmitry Peskov, a special envoy for the President of the Russian Federation for Digital and Technological Development, has recently argued that the financial risks of the CBDC issue are so great that it might be more beneficial to wait on the sidelines and learn from the experiences of others’ implementation .
Federal Reserve Chairman Jerome Powell agrees, stressing that “it is more important for the United States to get it right than the first to do it” and is rushing to spend a digital dollar.
Having made significant strides in digital currency development and pilot projects, China now appears to have some catching up to do in the areas of legislation and regulation. The People’s Bank of China published a draft law for public consultation last week, which aims, among other things, to anchor the primacy of the digital yuan over potential third-party competitors.
In the supranational area, the Bank for International Settlements coordinates with the Canadian Central Bank – in addition to those of the United Kingdom, Japan, the European Union, Sweden and Switzerland – the thorough assessment of CBDCs from a technical, regulatory and institutional point of view.