The Bank of Canada has decided not to move forward with the development of its digital currency, known as the digital Loonie, after several years of exploration that began in 2017. This decision comes amid rapid digitalization and changes in the ways Canadians pay, and follows a public consultation process in 2022. The bank confirmed the information to local press, stating that it has conducted “significant research to understand the implications of a central bank retail digital currency, including exploring the implications of a digital dollar on the economy and financial system, and technological approaches to providing a digital form of public money that is secure and accessible.” Rather than launching a CBDC, the central bank will focus on preparing for the evolution of digital payments both in Canada and globally, through research and policy analysis. This decision is in line with the growing distrust of Canadians towards their government regarding the issuance of a CBDC. As BitcoinDynamic reported, 9 out of 10 Canadians distrust their government for such an issuance. Canada's decision reflects global concerns about privacy. CBDCs, when issued by central banks, could allow for an unprecedented level of monitoring and control over citizens' financial transactions. This risk was highlighted in an analysis by Alberto Boada, secretary of the Bank of the Republic of Colombia, for whom CBDCs could turn central banks into the “Big Brother” (in allusion to George Orwell's work 1984) of the digital economy. This implies that, with these currencies, monetary institutions will be able to monitor each transaction, potentially affecting the privacy of individuals, as reported by BitcoinDynamic.
South Korea to test its CBDC
In contrast, South Korea is preparing to test its own CBDC by the end of the year. The Bank of Korea, in collaboration with six major commercial banks, is organizing a usability test that will involve 100,000 citizens.
This initiative, confirmed at a recent meeting at the Korean Federation of Banks, seeks to assess the effectiveness of the CBDC to replace traditional transaction and settlement systems based on central bank deposits. Participating banks are selecting outlets for the deposit tokens, with NH Nonghyup Bank planning to include Nonghyup Hanaro Mart and others in talks with convenience store chains. Canada’s stance underscores the complexity of implementing a CBDC, considering not only the technological and economic advantages, but also the social and privacy implications. While South Korea moves forward with trials, Canada chooses a more cautious approachfocusing on the evolution of digital payments without the immediate implementation of a CBDC.
This article was created using artificial intelligence and edited by a human on the editorial staff.