Canada does not want “surprises” about central bank digital currencies. In a recent interview with Reuters, Bank of Canada Governor Tiff Macklem doubled down on the country’s contingency plan approach to CBDCs, stressing that he did not see the urgent need to issue one to the moment.
For Macklem, interstate competition and coordination remains the key issue when it comes to issuing CBDCs. He told reporters:
“If another country has one and we don’t, it could certainly create problems. So we want to make sure we’re ready. Currencies cross borders, so we certainly wouldn’t want to be surprised by another country. “
To this end, Macklem said Canada is working with its G7 partners to ensure that information, planning and eventual timelines for CBDCs are shared.
The country has a collaborative CBDC research project, Project Jasper, underway since 2017, which focuses on wholesale applications for central bank digital currency. Jasper has notably involved experiments with distributed ledger technologies through public-private cooperation, involving R3, Accenture, JP Morgan Chase, the Monetary Authority of Singapore and the Bank of England.
Canada has recently sought to recruit talent for the potential development of a CBDC, signaling its interest in working with candidates who have extensive knowledge of existing private cryptocurrencies and their underlying technologies. Indeed, apart from other central banks that have seized the initiative, the Bank of Canada also sees stablecoins from the private sector, such as Libra, as a potential trigger that would justify getting the ball rolling with the issuance of CBDC.
From this perspective, Canada aligns itself with the Eurozone and the United States in its aggressive stance on Facebook’s digital currency ambitions.
By far the most ambitious and important move in the CBDC landscape is the Chinese digital yuan, which has already been tested in major cities and key economic regions. While this has certainly sparked discussion of a geopolitically charged CBDC race, some countries remain skeptical that whoever comes first will necessarily have an advantage.
Dmitry Peskov, a special representative of the President of the Russian Federation on digital and technological development, recently argued that the financial risks of issuing CBDCs are so great that it may be more beneficial to wait on the sidelines and learn from the experiences of others with the implementation.
US Fed Chairman Jerome Powell agrees, stressing that it is “more important for the United States to do it right than to be the first” and to rush to issue a digital dollar.
Indeed, after having made significant progress in the development and pilot projects of digital currency, China now seems to be catching up on the legislative and regulatory front. The People’s Bank of China last week released a bill for public comment that seeks, among other guarantees, to enshrine the primacy of the digital yuan over potential third-party competitors.
On the supranational front, the Bank for International Settlements coordinates with the central bank of Canada – alongside those of the United Kingdom, Japan, the European Union, Sweden and Switzerland – to thoroughly assess the CBDC from a technical, regulatory and institutional point of view.