Canada Rejects CBDC and Develops National Payment Systems
The Bank of Canada (BoC) suspended the development of a retail central bank digital currency (CBDC) in order to focus on regulating the payments sector and modernizing national payment systems.
The Bank of Canada announced the decision to suspend work on a retail CBDC as the Canadian population showed little interest in adopting the digital currency. Besides, several studies conducted by the BoC showed that the digital Canadian dollar poses certain risks to the country’s financial system.
According to its official website, the BoC will focus on the development of national payment systems. The regulator’s priorities will be to modernize the payments infrastructure and strengthen regulation. In particular, the bank plans to focus on the development of research in the field of payment systems, as this area underwent significant innovations in recent years.
The Bank of Canada intends to further develop the Real-time Rail instant retail payment system being built under Payments Canada. The system aims to speed up and improve the security of payments by providing market participants with more flexible solutions for everyday transactions.
Payments Canada is an association operated by the country’s payment clearing and settlement system. It brings together more than 100 participants in the Canadian payments market, enabling the Bank of Canada to conduct large-scale research on a national scale.
Another important area of the BoC’s work will be to strengthen oversight of retail payments. Local legislation will require all payment service providers to register with the BoC starting November this year. From 2025, new operational risk management standards for payment providers will come into force.
The BoC is prepared to continue working on the CBDC as needed if there’s sufficient public and political support. The bank will be ready for the possible introduction of the digital Canadian dollar, and the accumulated knowledge and experience will be useful if such a decision is made.
Research on the retail CBDC in Canada is ongoing since 2022.
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