Canadian Officials Reportedly Warn about Digital Loonie

According to the recent reports published by the Canadian press, some finance officials have raised concerns regarding the potential implications of ‘Digital Loonie’ on the country’s economy.

A report published by the Global News shows that officials warned Chrystia Freeland, Canada’s Finance Minister, about the negative impact of a Central Bank Digital Currency (CBDC) on Canada’s financial system.

According to internal government documents obtained by the Canadian Press under the access-to-information law, the Bank of Canada held several meetings with federal officials in 2020 to evaluate the implications of a digital loonie on different departments and agencies.

Just like other central banks around the world, the Bank of Canada is planning to introduce a roadmap for a CBDC in the coming months. While other central banks like the Bank of Jamaica have already announced the successful completion of the CBDC Pilot, Canada’s central bank is currently waiting for clarity on the use of cryptocurrencies and DLT in the country.

“The use in Canada of private cryptocurrencies tied to the American dollar would strain the Bank of Canada’s ability to manage monetary policy for the benefit of the country. The government could quash this thing in a second. I don’t think they want to because there are benefits to the private cryptos that people like, but we want to also maintain that public good function. To do that, I think the (central bank digital currency) is the way to go,” Jeremy Kronick, the Associate Director of research at the C.D. Howe Institute, told the Global News.

Global CBDCs

Apart from the digital loonie, several other digital versions of the world’s prominent currencies are under development. In October 2021, ECB announced the appointment of 30 members for the Digital Euro Market Advisory Group. Furthermore, Mexico is planning to launch its CBDC by 2024.