It is of greater significance to the Canadian central bank to regulate and expedite payments in the absence of a CBDC.
According to an update to the central bank’s website, the Bank of Canada is discontinuing its efforts to develop retail central bank digital currency (CBDC). The announcement did not specifically address wholesale CBDC; however, it underscored that its research was ongoing.
The Bank of Canada has conducted a comprehensive investigation into CBDC and is currently redirecting its attention to other more urgent matters.
The Bank of Canada maintained that it required a “contingency plan” in the event that CBDC became necessary. The bank’s current focus is on preparing for new responsibilities. According to the Bank of Canada,
“The Bank is reducing its efforts to establish a retail central bank digital currency and instead concentrating on the research and policy development of the broader payments system, as other payment issues have gained prominence.”
The retail-oriented Real-time Rail immediate payment system is currently under development by Payments Canada, the association responsible for the country’s payment clearing and settlement system. The Bank of Canada is among the more than 100 members of the association.
Furthermore, the Bank of Canada is in the process of intensifying its oversight of retail payments in accordance with the Retail Payment Activities Act of 2021. The act requires the central bank to commence the registration of 2,500 small payment service providers that were previously only subject to Anti-Money Laundering provisions in November and the enforcement of operational risk standards in 2025.
In collaboration with the Bank for International Settlements and the Digital Currency Initiative of the Massachusetts Institute of Technology Media Labs, the Bank of Canada has conducted research on CBDCs.
The bank conducted its own investigation, which fluctuated between high-level and street-level. The bank repeatedly discovered that the Canadian public had little interest in a CBDC, and the new form of money would have new disadvantages for the financial system and the public.
the bank stated that its CBDC research “will be invaluable if, at some point in the future, Canadians, through their elected representatives, determine they want or need a digital Canadian currency,” despite its changing priorities.
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