Bank of Canada halts digital dollar project amid global surge in CBDC development

Canada has reportedly put its central bank digital currency (CBDC) project, which began in 2017, on hold.

According to a Sept. 18 CBC news report, after years of research into the potential of a digital version of the Canadian dollar, the local central bank has decided to walk away from the initiative.

Bank of Canada rethinks digital currency plan

The CBDC project was initiated in response to the rapid digitization and changing payment habits among Canadians. In 2022, the country’s central bank also held a public consultation to gather opinions on the potential of the virtual currency.

However, a subsequent report released by the institution in November 2023 highlighted that while Canadians were familiar with CBDCs, they “struggled” to understand the rationale behind a virtual version of the country’s fiat currency.

In a subsequent online survey, nearly 87% of participants said they would never use a digital Canadian dollar. A further 92% stated that they would under no circumstances prefer CBDCs to existing means of payment.

Cyber ​​security threats and privacy issues were also raised. 87% expressed concern about the Bank of Canada’s ability to protect digital currency users against cyberattacks.

The tax regulator has always insisted that the Canadian digital dollar would not replace paper notes, but was intended to simplify online shopping and transferring funds.

Now, he seems even less committed to the idea as he reportedly turns his attention to research and policy analysis to find ways to adapt to the changing local and global payments landscape.

Global CBDC momentum continues to grow

The reported shift in priorities comes even as the world is seeing growing interest in CBDCs. Three countries, the Bahamas, Jamaica and Nigeria, have fully rolled out these products and are now working to expand their use.

Additionally, data from the Atlantic Council’s CBDC Monitor shows that by September 2024, 134 countries and currency unions, representing 98% of global GDP, are exploring central bank-issued digital currencies.

Industry observers say these projects have increased as a result of geopolitical events such as Russia’s invasion of Ukraine. There are now 13 cross-border initiatives underway, including Project mBridge, which links banks in China, Thailand and other nations.

China’s digital yuan pilot program remains the largest in the world, with transactions reportedly totaling 7 trillion yuan (roughly $986 billion) by June 2024. This figure is nearly four times the total last year

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