Canada is working with its G7 partners to ensure that there is information sharing, planning and possible timelines for a CBDC.
Canada does not want any „surprises“ with regard to CBDCs. In a recent interview with Reuters, Bank of Canada Governor Tiff Macklem doubled the focus of the country’s contingency plan for CBDCs, and emphasized that he does not see an urgent need to issue one at this time.
For Macklem, inter-state competition and coordination remains the key issue when it comes to issuing a CDB. He told journalists:
„If another country has one and we don’t, that could certainly create some problems. So we want to make sure that we are ready. The coins are moving across borders, so we certainly wouldn’t want to be surprised by another country.
Bank of Canada prepares for digital currency „in case it’s needed
To that end, Macklem said that Canada is working with its G7 partners to ensure that information, planning and possible schedules for CBDCs are shared.
The country has had a collaborative CBDC research project, the Jasper Project, in place since 2017, which focused on wholesale applications for central bank digital money. Jasper involved notably experiments with distributed accounting technologies through The News Spy public-private partnerships, involving companies such as R3, Accenture, JP Morgan Chase, the Monetary Authority of Singapore and the Bank of England.
Canada has recently been looking to recruit talent for the potential development of a CBDC, which indicates its interest in working with candidates who have an in-depth knowledge of existing private cryptomonies and their underlying technologies. Indeed, in addition to other central banks taking the initiative, the Bank of Canada also sees private sector stablecoins, such as Libra, as a possible trigger that would justify launching a CBDC issue.
From this perspective, Canada aligns itself with the euro area and the United States in its aggressive stance towards Facebook’s digital currency ambitions.
Russia need not be the first to have a CBDC, says one state official
By far the most ambitious and far-reaching movement in the CBDC landscape is China’s digital yuan, which has already been tested in major cities and key economic regions. While this has certainly led to talk of a geopolitically charged CBDC race, some countries remain sceptical that the first mover 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 advantageous to wait on the sidelines and learn from others‘ experiences with implementation.
US Fed Chairman Jerome Powell agrees and emphasizes that it is „more important for the United States to do well than to be first“ and rush to issue a digital dollar.
The Bank of Japan will begin proof of concept for its digital currency in 2021
Indeed, having made significant progress with the development and testing of digital currency, China seems to be catching up on the legislative and regulatory front. The People’s Bank of China published a draft law for public consultation last week which seeks, among other safeguards, to enshrine the primacy of the digital yuan over potential external competitors.
On the supranational front, the Bank for International Settlements is coordinating with the central bank of Canada, along with those of the United Kingdom, Japan, the European Union, Sweden and Switzerland, to thoroughly assess CBDCs from a technical, regulatory and institutional point of view.