The Bank of Canada has hired a product architect as it continues to promote the Central Bank Digital Currency (CBDC) “emergency response plan,” and some speculate on potential outcomes.
Digital currencies are a hot topic south of the border, as US citizens are waiting for a Federal Reserve treatise to be published soon at their own CBDC. This idea may be new to Americans, but the Bank of Canada has been publishing a report on this concept since November 2016.
A year ago, the bank worked with six other central banks and the Bank for International Settlements to create a report to establish the basic principles and core functions of the CBDC. In February 2021, the bank announced three CBDC proposals. One from the University of Calgary, the other from McGill University, and co-submitted by the University of Toronto and the University of York.
In an email to The Epoch Times, Bank of Canada spokesman Alex Paterson said the proposal was made to stimulate thinking.
“”[T]The design he proposed was not intended to be adopted by the World Bank. Rather, the World Bank will use these reports to convey ideas about central bank digital currency design and facilitate public conversations, “Patterson wrote.
Bank leaders have consistently said they are just trying to get ready and that digital currencies are not certain.Governor Tiff McKrem told the media During april The decision was ultimately left to the Minister of Finance, adding that “when issuing digital currencies, we will not stop printing cash.”
Still, banks are taking steps to bring their products to market. In August, we issued job listings to product architects for “a socially important program for designing conditional systems for the Central Bank Digital Currency (CBDC), which can be considered banknotes but in digital form.” ..
According to the post, part of the job is “to create a consistent product architecture and design that can be adapted nationwide and adapted for decades.”
Potential drastic changes to banks
According to Stephen Ambler, an economist at the University of Quebec in Montreal, the CBDC has broad implications.
“Central banks may unfairly compete with commercial banks by offering higher interest rates or charging lower rates, and Seigniorage income (to subsidize this unfair competition) Eventually you may use taxes), “Ambler said in an interview.
“Commercial banks are forced to rely on deposits to raise funds and can behave like investment banks.”
Seigniorage is the interest earned on a banknote minus the cost of creating, distributing and exchanging the note.
If the central bank takes on more debt as a result of the issuance of the CBDC, Ambler states that it needs to acquire more assets. This includes taking on most of the government debt or playing an active role in the economy, as the Federal Reserve did in the United States.
However, he said, central banks tend to be wary of digital currencies and “if the demand for their own currency disappears in favor of something else (cryptocurrency or stablecoin version), this is currency management. He said it would be accompanied by loss. “
Privacy and management concerns
China’s central bank has issued its own digital currency, and said the state-owned Global Times will help challenge “hegemony of the US dollar.” Meanwhile, it banned Bitcoin. In April, hedge fund manager Kylebus told NTD Television, a network affiliated with The Epoch Times, that the move is a means of controlling Chinese domestically, but will someday be used by foreign investors as well. He said there was a possibility.
“If you think [Chinese leader Xi Jinping] Is a terrible ruler, suddenly your global social credit score is struck and the Chinese can actually stop their ability to spend your money, “Bass said.
“This is the way they can export digital authoritarianism to the world and what we have to stop.”
Some believe that Western countries will be left behind if they don’t have a domestic version of China’s digital yuan, but others disagree.so Recent interview Along with Kitco News, Canadian businessman and entrepreneur Kevin O’Leary downplayed development.
“Who would put it on the balance sheet outside of China? As far as I am concerned, it’s a toxic waste. I don’t touch it, so I never assign a value to it. Who owns it, who owns it I don’t like tracking it because one individual in the foreign government decides if it can’t and tells them that the blockchain is owned by me. No, no, “Oleary said. rice field.
“”[We will] I’m still talking 20 years from now.What is likely to happen is that they [the U.S. Federal Reserve] Regulate the issuer of stablecoin as a bank. “
Ambler believes that the desire to “be able to more closely monitor people’s transactions” is part of the CBDC’s motivation, but the democratic government can ban or ban Bitcoin and cash. I don’t think it’s sex.
“I personally think there is a way out of surveillance and control, and I don’t think they can if the government tries to become too authoritarian … one of the things COVID has taught me. Is a demand for security, even if people sacrifice very high personal rights and freedoms, “he said.
Sweden, one of the fastest growing countries for digital payments, has the option of inserting a small computer chip under the back of the hand that can be used for certain transactions. So far, about 3,000 Swedes have transplanted microchips.