Global: Canada Shifts Focus from CBDCs to Broader Payments Landscape

Canada has paused its experiment with a central bank digital currency (CBDC), shifting its focus to other pressing payment system issues.

After years of researching the concept of a digital Canadian dollar, the Bank of Canada recently announced that it is scaling back its efforts on a retail CBDC and moving toward broader payments system research and policy development. “With this work completed, and with other payments issues gaining prominence, the Bank is scaling down its work on a retail central bank digital currency and shifting its focus to broader payments system research and policy development,”read a statement on the bank’s website. The central bank assured Canadians that it would remain prepared to ensure the continued availability of secure public money.

This development was further confirmed by CBC, Canada’s public broadcaster, which reported that the central bank was effectively shelving its retail CBDC project for the foreseeable future.

Going forward, the Bank of Canada will focus on major developments in Canada’s payments ecosystem, including retail and wholesale payments infrastructure and collaborative cross-border payments projects with other central banks.

This shift in focus comes at a time when Australia has also reassessed its own CBDC initiatives. The Reserve Bank of Australia (RBA) recently announced that it had not found a compelling public interest case for creating a retail CBDC. In a report, the RBA noted that Australians are already well-served by the resilience and capabilities of the current retail payments system. “In jurisdictions that have issued a retail CBDC or indicated that it is quite possible in coming years, the main motivations have less resonance in Australia,” the RBA stated.

The Australian central bank did, however, express a preference for a wholesale CBDC—one designed for banks and financial institutions—as the potential benefits appeared more promising for wholesale applications. The RBA indicated that its view on retail CBDCs might evolve as further research is conducted and costs and benefits become clearer.

Brad Jones, assistant governor of the RBA, noted, “At the present time, we assess the potential benefits as more promising, and the challenges less problematic, for wholesale CBDC compared to a retail CBDC.”

Globally, CBDC exploration continues at a significant pace. Recent research by the Atlantic Council found that 134 countries, representing 98% of the global economy, are exploring CBDCs. The data shows that all G20 countries are engaged in CBDC exploration, with pilot projects underway in 44 nations, a notable increase from 36 countries last year.