Bank of Canada issues contingency plan: either scenario could lead the central bank to issue a digital currency

The Bank of Canada has released a contingency plan to deal with the future need to issue its own digital currency, BlockBeats reported. The bank of Canada says it will issue digital currency to address both problems if physical money is reduced or not used at all, or if private cryptocurrencies invade the country.

While the bank of Canada said there was no "compelling" reason to issue a national digital currency, it also wanted the ability to do so. Timothy Lane, deputy governor of the bank of Canada, said: "we need to move forward and figure out what a potential CBDC [central bank digital currency] might look like and how it would be managed if it was decided to issue it."

The bank of Canada has identified two scenarios in which it might decide to issue digital currency:

First, if the use of physical money were completely reduced or eliminated,

Second, if private cryptocurrencies invade in large Numbers.

"In both cases, there is a case for the bank of Canada to step in," & NBSP; Lane said. "The bank will do this as a trusted public institution, creating an official digital currency that is designed to put the public first and has no commercial motive." Lane singled out the second scenario as an "unacceptable challenge" to Canada's currency sovereignty, adding that Libra, a facebook-led stability currency project, was one of them. As a result, the central bank said it was "critical" to prepare ahead of time, although it would take "several years" to build a true digital currency prototype. For now, the bank of Canada will consult with "Canadian provincial and territorial governments and key stakeholders" to see if and how they want a digital currency, Lane said.

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In general, the central Banks want a broad consultation. Last month, the Bank of Canada also formed a working group with the Bank of England, the Bank of Japan, the European central Bank, the riksbank and the Swiss national Bank, as well as the Bank for International Settlements. Lane concludes, "we will use this platform to share experiences to evaluate potential cases for the establishment of CBDCS in our jurisdictions."

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