CD How Institute Says Bank of Canada Should Issue A Digital Currency

OTTAWA – The CD Howe Institute believes the Bank of Canada should issue a digital currency that can be converted into cash.

In a new report, the think tank says Canadian dollar-linked stablecoins could become attractive if they can be converted into cash issued by the Bank of Canada and are well designed and regulated.

A stablecoin is a cryptocurrency that is linked to an underlying asset such as a fiat currency.

It believes that a Bank of Canada digital currency should be issued in token form, with decentralized transaction settlement technology.

It says bank-issued Canadian digital dollars could also encourage the private sector to introduce Canadian dollar-pegged stable coins by enabling convertibility digitally without relying on physical notes.

The report’s authors add that stablecoin platforms can access the Bank of Canada’s liquidity facilities and deposit insurance to reduce the risk of runs.

This report from The Canadian Press was first published on November 25, 2021.

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