The Bank of Canada, the country's central banking entity, confirmed that its CBDC for the Canadian dollar has already passed the testing stage, in addition to revealing that it is working with G7 partners to advance this important development.
The fever for central bank digital currencies (CBDC) has reached many countries around the world, including Canada, which in the past denied its interest in these currencies, although in reality it was entering the race to issue its own digital currency, as a way to maintain and protect its monetary sovereignty. This was confirmed by the governor of the Bank of Canada (BoC), Tiff Mackle, who during a interview with Reuters stated that the entity is working with the member states of the Group of Seven (G7), to advance their plans to create and issue a central bank digital currency (CBDC).
According to Macklem's statements, the central bank will move from proof of concepts to designing and executing more complete plans for the development of the digital currency for the Canadian dollar, although at the same time he stated that he did not see the need to issue a digital dollar in the country at this time. Macklem pointed out that if other countries issue their own digital currency and Canada does not, they may face several problems related to the introduction of foreign currencies that affect their monetary sovereignty, so he says that the entity will be prepared for these events.
"If another country has one and we don't, that could certainly create some problems. So we want to make sure we are ready.”
So far, the only country that has launched a real CBDC digital currency is the Bahamas. This medium reported that the CBDC "sand dollar" became a reality, on October 20, for its 339 thousand inhabitants, who will now be able to make real use of this currency closely integrated with the nation's services.
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To BoC expectations
The Bank of Canada's approach appears to have changed in recent months, since the entity's governor indicated in April that it would not encourage the creation and development of a digital currency. However, during the recent interview, Macklem warned that digital currencies move across borders, so they can certainly pose a risk to the country's economy. In his statements, the executive points out that they do not want to be surprised by any other innovation designed by another country, which is why they are focusing on creating their own CBDC to be prepared.
“Currencies move across borders, so we certainly wouldn't want to be surprised by some other country.”
Likewise, Macklem pointed out that the entity's coordination with other organizations is also an important factor in moving forward on the right path. The Bank of Canada is working together with the G7 to design the fundamentals and basic principles for the issuance of these digital assets.
G7 involvement in CBDC currencies
In her report, where the Bank of Canada, the European Central Bank, the Bank of Japan, Sveriges Riksbank, the Swiss National Bank, the Bank of England, the Board of Governors of the Federal Reserve and the Bank for International Settlements participate, the G7 notes that Central entities must study and analyze the pros and cons of offering a digital currency to their public, to be at the forefront of current developments and innovations.
The organizations that make up this banking and financial group are establishing the fundamental criteria for any jurisdiction that wishes to innovate within this space, with the purpose of ensuring that future issues of digital currencies do not threaten the financial stability of other nations, nor compromise their monetary sovereignty.
The G7 affirms that CDBC digital currencies can coexist in the world and complement the forms of fiat money that exist in different nations, as long as certain basic criteria are met and respected. On the other hand, the organization affirms that central entities must remain at the forefront of current and future technological development and innovation, and that digital currencies can constitute an essential factor that helps them meet their public policy objectives.
Advances of CBDCs in the world
Canada, France, Germany, Italy, Japan, the United Kingdom and the United States are the member states that make up the Group of Seven (G7), and some of them have already made considerable progress in the development of a CBDC. For example, the Bank of France recently incorporated Consensys into its digital euro project, claiming that this firm has the experience and technology necessary for the development of this CBDC.
The United States, for its part, although it has not confirmed the issuance of a digital dollar, is carrying out studies on this currency. Recently this medium reported that Lael Brainard, governor of the FED Board, confirmed that he was carrying out in-depth studies of the technology blockchain, as a basis for analyzing the possible creation of a hypothetical digital currency (CBDC) for the dollar.
On the other hand, countries outside the G7, such as China, Japan and South Korea, also have significant advances in the development of these currencies, with China being the most advanced nation and closest to issuing its DCEP or digital yuan.
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