Is Canada getting a CBDC? One Canadian think tank thinks it would be for the public good.
- Canadian CBDC: For The Public Good
- Private Cryptocurrencies And A Canadian CBDC
Canadian CBDC: For The Public Good
Canada has been ruminating on a CBDC since early 2020 with little to show for it. But signs are pointing to one coming eventually. The motivation? If this think tank report has it right, it might be to keep US-backed cryptocurrencies from weakening Canadian monetary policy.
CD Howe Institute wrote in a recent-ish report, that Canada should consider a CBDC, “not simply for defensive reasons, but as a way to facilitate the emergence of stablecoins that are tightly linked to the Canadian dollar.”
Very few Canadian-backed stablecoins are available (TrueCAD being one of the few). Thus, most Canadians — and most of the crypto world really — use American-backed stablecoins. Why is this a potential problem?
“If Canadians largely saved in some form of private cryptocurrency that was not closely tethered to the Canadian dollar, the Bank of Canada would be able to provide only limited emergency liquidity in a crisis, as it would be restricted to the reserves it held in the cryptocurrency. This, in turn, could hinder the federal government’s ability to borrow in Canadian dollars in times of stress to stabilize the economy.” CD Howe Institute
A Canadian CBDC would alleviate those concerns. “Having the Bank of Canada issue digital Canadian dollars could play an important role in facilitating the emergence of cryptocurrencies in Canada while helping to retain the Canadian dollar as the country’s principal unit of account,” says CD Howe Institute.
Private Cryptocurrencies And CBDCs
How does a CBDC help private cryptocurrencies? Theoretically, a CBDC would foster more cryptocurrencies pairings.
Imagine a BTC/CDST pairing? Or, ETH/CDSC? Maybe even a CDAI? It could happen. And probably should.
The irony in all of this is the constant fearmongering from American politicians about how stablecoins are a threat to the US dollar. Sure seems like the US has imposed its will on stablecoins whether it would like to admit to it or not.
Recommended: Regulators Be Damned: PayPal Exploring Stablecoin