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Bank of Canada: Weak Incentives for Canadians to use CBDC

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1 year ago

August 11, 2023

The Bank of Canada published a staff discussion paper on August 10, which examined the potential acceptance of a central bank digital currency (CBDC) among average Canadians. The study explored how a CBDC could assist the underbanked in a scenario where physical currency is scarce.

According to the research, few consumers would find compelling reasons to use CBDC due to Canadians’ easy access to financial services. Similarly, the study revealed that Canadians have high ownership of credit cards (87%) and bank accounts (98%). Moreover, 90% of households, whether urban or rural, have Internet access.

However, digital alternatives could pose challenges for individuals who prefer traditional payment methods or avoid technology. Those reliant on cash might encounter difficulties with regular payments.

Furthermore, the study suggested several measures to assist the underbanked, including improving internet access, offering low-cost bank accounts, fostering business cooperation, and maintaining cash availability. It further acknowledged the challenge of predicting Canadian responses to a CBDC and recognized barriers to widespread adoption.

The paper emphasized the crucial role of physical cash, particularly during emergencies like weather events or power outages. This underscores the Bank of Canada’s commitment to cash issuance.

Also, the paper noted that the central bank intends to provide cash as long as there is demand and a CBDC would only be introduced in a cashless society or if foreign CBDCs/cryptocurrencies gained significant traction.

The research examines the willingness of Canadians to adopt a CBDC, taking into account its effects on different segments, in the same vein, the paper acknowledged uncertainties while emphasizing the significance of physical cash and the central bank’s commitment to accessibility.

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