Bank of Canada Scales Back Retail CBDC Efforts, Focus on Broader Payment Systems

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The Bank of Canada has announced that it is winding down its research into a retail central bank digital currency (CBDC), marking a shift in its priorities toward broader payment system issues. The update, posted on the central bank’s website, emphasized that while research into CBDC will continue in some capacity, other emerging financial concerns have taken precedence.

Years of Research by Bank of Canada

For years, the Bank of Canada explored the concept of a CBDC as a “contingency plan” in case it became necessary to introduce a digital version of the Canadian dollar. However, recent developments suggest the central bank has pivoted its focus. In a statement, the bank explained:

“With other payments issues gaining prominence, the Bank is scaling down its work on a retail CBDC and shifting its focus to broader payments system research and policy development.”
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One of the pressing areas gaining attention is Payments Canada’s Real-time Rail instant payment system. Payments Canada, which oversees the country’s payment clearing and settlement systems, is working to develop faster, more efficient retail payment solutions.

The Bank of Canada is also preparing to take on a more active supervisory role in the retail payments space under the 2021 Retail Payment Activities Act. The law requires the central bank to begin regulating approximately 2,500 small payment service providers by November, with full operational risk oversight coming in 2025.

Broader Work on Digital Currencies

While retail CBDC development is slowing, the Bank of Canada’s broader work on digital currencies is not being abandoned entirely. The central bank has previously collaborated with international organizations such as the Bank for International Settlements and MIT’s Digital Currency Initiative. However, their findings have shown that Canadian consumers have little interest in a government-backed digital dollar.

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A 2022 report from the Bank of Canada revealed that while over 90% of Canadians were aware of Bitcoin in 2021, there remains low enthusiasm for a CBDC among the general public.

Despite the change in focus, the bank noted that its research into CBDC will remain valuable if, at some point in the future, Canadians, through their elected representatives, express a need for a digital Canadian dollar. In the meantime, the bank is turning its attention to more immediate concerns within the country’s payment infrastructure, ensuring that the evolving financial landscape is adequately managed.