Canada is now the latest country to fall in line with the global push for central bank digital currencies (CBDC), with the Bank of Canada (BOC) launching a public consultation for feedback on the features of another Canadian dollar.
Canadian CBDC Consultation
The consultation period was announced in a BOC press release:
The way Canadians pay for everything from the daily necessities to major purchases is evolving rapidly. As the world becomes increasingly digital, the Bank – like many other central banks – is exploring a digital version of Canada’s national currency.
The BOC then said the Canadian dollar is not currency needed, but that governments want to be prepared to create one when the time comes and that it wants public buy-in before the matter comes to a vote in Parliament.
Deputy Governor Carolyn Rogers said:
As Canada’s central bank, we want to make sure everyone can always take part in our country’s economy. That means being ready for whatever the future holds.
In other words, the Canadian government wishes the public to buy into money which can be turned off, in the event that traditional banking collapses continue. If money can be switched off, is it not just a coupon code with an expiration date?
The consultation period opened on Monday and will run until June 19.
CBDC features
The BOC is looking to create a Canadian CBDC that’s supposedly intended to serve Canadians. As such, public feedback and direction is important for banks to understand which features are important.
Along with these features, the BOC is attempting to get further insight as to how people might use the Canadian CBDC, what security features are important, and concerns people have regarding privacy and accessibility.
We want to hear from Canadians about what they value most in the design of a digital dollar. This will help us make design choices and ensure that it is secure, reliable and meets the needs of Canadians, Rogers said.
The BOC underlined that it understands the importance of physical cash to Canadians, which they called “a safe, accessible and trusted method of payment that anyone can use, including people who don’t have a bank account, a credit score, or official identification documents.”
The BOC wrote:
If a digital Canadian dollar is issued in the future, the Bank will continue to provide banknotes for those who want them. Cash isn’t going anywhere.
In the European Union, cash transactions have been limited to 10,000 Euros, and individual countries can restrict cash even further.
The BOC then indicated that there may be a time when usage of banknotes diminishes significantly, which could risk excluding Canadians from taking part in the economy, they said.
There is also the threat of a private cryptocurrency or CBDC issued by another country becoming widely adopted in Canada, which could “compromise the role of an official, centrally issued currency – the Canadian dollar – in our economy and pose a risk to the stability of our financial system.”
For this reason, they say, the BOC is exploring a Canadian CBDC.
Civil rights concerns
Central Bank Digital Currencies have raised concerns across the globe due to their inherent ability to be turned off at will.
The Bank of Canada CBDC survey is dangerously dystopian: they only ask if you want to hold or receive a _limited_ amount of money anonymously and don’t even mention sending money anonymously.
We need more people to respond to this and make it that this is unacceptable. https://t.co/ssPZgUkybs pic.twitter.com/ANvX3ausn1
— Peter Todd/mempoolfullrbf=1 (@peterktodd) May 9, 2023
CBDCs are problematic for a number of reasons. Surveillance and direct capital controls on individuals opens the door to discrimination and political persecution. While open ledger cryptocurrencies such as Bitcoin and Litecoin can be tracked on layer one technology, political persecution via the monetary rails is impossible.
Concerns are not unwarranted. In early 2022, Canadian authorities froze bank accounts of ‘Freedom convoy’ protestors. In other words, the Trudeau administration has already attempted political persecution through the traditional banking system. Protestors resorted to cryptocurrencies to get around government overreach. Notably, no Western countries spoke out against the draconian measure at the time.
Physical cash mitigates this problem today. But it remains to be seen whether mobile application convenience will be enough to lure Canadians into the CBDC trap.
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