Oct. 30, 2020
OTTAWA — The Bank of Canada is working closely with its G7 and other partners on digital currencies, Governor Tiff Macklem said in an interview on Wednesday, adding a globally coordinated approach was needed to prevent surprises and keep such tools from being used by criminals.
Macklem told Reuters that the central bank was working on moving from demonstrating feasibility to more fully executable plans for a digital loonie, but saw no compelling need for one “right now.”
“If another country has one and we don’t, that could certainly create some problems,” said Macklem. “So we want to make sure we’re ready.
“Currencies move across borders, and so we certainly wouldn’t want to be surprised by some other country. It will be important for us to share information on what each of us is doing.”
China has been experimenting aggressively with a digital renmimbi as it looks to reduce its dependence on the global dollar payment system. It ran a US$1.5 million real-world trial earlier this month.
That, along with efforts by Facebook Inc. to ready its Libra stablecoin offering, prompted seven major central banks — including the Bank of Canada — to lay out key principles earlier this month for issuing central bank digital currencies. The world’s largest central banks, and even some of the smaller ones, are toying with the idea of issuing digital currencies. One of the main concerns is a loss of control of the payment system if private currencies are widely adopted.
Macklem said the Bank of Canada was working with its partners at the G7, the Financial Stability Board and the G20 to ensure “potential private-sector solutions are being used by the right people for the right reasons.”
“You’ve really got to make sure that they’re not being used for money laundering, they’re not being used for terrorist financing, and that is not something that any one country can deal with by themselves,” he said.
Earlier this month, Deputy Governor Tim Lane said the COVID-19 pandemic was speeding the shift to digital, prompting the bank to move more quickly in its research on a digital currency.
Macklem echoed those comments as he pointed to a rapid digitization of the economy as one of the scenarios where it would make sense to move ahead, although he stressed any decision would have to come from the finance minister.
“The next phase will be to really move from proof of concepts to more fully executable plans. That is something we are working on and this acceleration we have seen in digitalization in the current pandemic only makes this more pressing,” he said.