Canada explores digital currency as Biden calls on US to consider its own options.
The Bank of Canada is partnering with the Massachusetts Institute of Technology (MIT) to explore central bank digital currencies (CBDCs).
Canada’s central bank announced yesterday that it has reached an agreement with MIT Media Lab’s Digital Currency Initiative (DCI) to conduct a 12-month research project that will take a closer look at “how cutting-edge technologies could affect the potential design of a CBDC”.
The announcement of the Bank of Canada-MIT project comes shortly after the President of the United States (US), Joe Biden, took significant steps on the crypto front. Last week, Biden signed a Executive Decree calling on the US government to research the risks and benefits of crypto and examine the potential for a US CBDC.
Amid the growing popularity of crypto, Canada and the United States are far from the only countries considering their own CBDCs.
CBDCs are virtual currencies backed and issued by central banks. The new Bank of Canada-MIT project is part of the Bank of Canada’s broader digital currency and fintech research and development program.
According to The logic, the Bank of Canada has been exploring the idea of a government-issued digital currency for years. The Bank of Canada says that to date, “no decision has been made on whether to introduce a CBDC in Canada.”
The MIT Media Lab’s DCI conducts research to support the development of digital currency and blockchain technology, collaborating with other universities and research institutes to write research papers, run pilot use cases, and create open-source software.
At an event in October 2021, Bank of Canada Deputy Governor Timothy Lane mentioned the Bank of Canada was beginning to build the capacity to issue a CBDC, but noted that the central bank did not see “a compelling need in the current circumstances” to issue one. However, Lane said that could change if the use of physical silver in Canada continues to decline.
Amid the growing popularity of cryptocurrencies and stablecoins, Canada and the United States are far from the only countries considering rolling out their own CBDCs.
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According to Atlantic Council’s, an American think tank specializing in international affairs CBDC tracker, nine countries have fully launched CBDCs, including the Bahamas and Nigeria, while 15 others, such as Sweden, Russia, Ukraine and China, are in the process of piloting their own digital currencies. The Atlantic Council lists Canada as being in the process of developing CBDCs and the United States as being in the research stage.
Among large countries, China has led the charge towards CBDCs and is currently rise in power its efforts to roll out its digital yuan to the wider Chinese population.
In the executive order last week, Biden said the United States will place “the highest urgency on research and development efforts into potential design and deployment options” for its own CBDC.
Bank of Canada featured image, via Flickr.
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