Canada Shifts Focus From CBDCs to ‘Payments Landscape’

Canada’s experiment with the digital dollar is over, at least for now.

The Bank of Canada announced recently that after years of exploring the idea of a central bank digital currency (CBDC), it was moving on.

“With this work completed, and with other payments issues gaining prominence, the Bank is scaling down its work on a retail central bank digital currency and shifting its focus to broader payments system research and policy development,” an announcement on the bank’s website reads. “The Bank will be ready to ensure Canadians always have a safe and secure supply of public money.”

A report by the CBC, the country’s public broadcaster, later confirmed that the central bank was “shelving” its retail CBDC project.

The Bank of Canada says it is now focusing on “major developments” affecting Canada’s “payments landscape,” including issues related to wholesale and retail payments infrastructure, and cross-border payments projects in collaboration with other central banks.

The news comes as Australia is taking similar steps with its CBDC efforts, with that country’s central bank announcing last week that “a clear public interest case” for creating a retail CBDC has yet to be found.

“This assessment is partly informed by the observation that Australians are generally well served by the capabilities and resilience of the current retail payments system,” the Reserve Bank of Australia said in a report.

“In jurisdictions that have issued a retail CBDC or indicated that it is quite possible in coming years, the main motivations have less resonance in Australia.”

The bank said that if it did issue a CBDC, it would be a wholesale version, one used by banks and other financial institutions. A retail CBDC would be used by the general public.

The RBA added that its opinion on retail CBDCs could change as the costs and benefits are better understood.

“At the present time, we assess the potential benefits as more promising, and the challenges less problematic, for wholesale CBDC compared to a retail CBDC,” said Brad Jones, the central bank’s assistant governor.

Meanwhile, recent research from the think tank Atlantic Council found that 134 countries —accounting for 98% of the world economy — are exploring CBDCS. The latest data show that all G20 countries are exploring CBDCs, with pilot projects happening in 44 countries, up from 36 last year.