Pandemic accelerates need to consider digital currency, says Bank of Canada

By Julie Gordon

OTTAWA, Oct 14 (Reuters) – The COVID-19 pandemic is accelerating public use of online services, meaning the Bank of Canada must study more quickly how a digital central bank product would work, it said on Wednesday a senior official.

The Bank of Canada has been exploring and building its capabilities for products such as a central bank digital currency (CBDC), but no specific timetable has been set for its launch, Deputy Governor Tim Lane said during a round table on the future of money.

“The main point, I think, is that all of this seems much more urgent because of the speed at which technology is evolving,” Lane said.

“With COVID, we have seen an acceleration of activity moving online, which suggests that if we want to be ready to develop any type of central bank digital product, we need to move faster than we thought necessary” , he said.

A digital currency would act like cash and streamline transactions by eliminating the need to use a payment card for online purchases.

Lane has previously said the Bank of Canada could launch a CBDC if a private cryptocurrency makes serious progress, creating privacy concerns.

Global central banks are developing rules and working on their own digital currencies to address the prospect of private cryptocurrencies, such as Facebook Inc’s Libra stablecoin project.

Lane told the panel that a number of stakeholders need to be consulted on issuing a CBDC, including banks and financial institutions, as well as technology companies.

“We are certainly talking to a number of companies that are developing products or also advising in this area,” he said.

On Tuesday, financial leaders from the world’s seven largest economies said no stablecoin operations should start until they are properly regulated. (Reporting by Julie Gordon in Ottawa, additional reporting by Steve Scherer; editing by Cynthia Osterman)