Bank of Canada shelves idea for digital Loonie

After several years of exploring the possibility of introducing a digital currency in Canada, the central bank is shelving the idea.

The Bank of Canada confirmed to CBC News it has shifted its focus away from the idea of introducing a digital Canadian dollar, which could be used for online purchases and money transfers.

The central bank had launched the research project in 2017 in response to rapid digitalization and changes in how Canadians make purchases, followed by a public consultation process in 2022.

This summer, the Bank of Canada released a staff discussion paper that argued the country would need its own digital currency to maintain monetary sovereignty and financial stability, among other reasons, as people continue to use less cash.

Now, the central bank is less eager to develop a digital Loonie.

"The Bank has undertaken significant research towards understanding the implications of a retail central bank digital currency, including exploring the implications of a digital dollar on the economy and financial system, and the technological approaches to providing a digital form of public money that is secure and accessible," the bank said in an email statement.

Instead, the central bank said its focus will be on preparing for the ongoing evolution of payments both in Canada and around the world, through policy research and analysis.

Other countries exploring centralized digital currency

More than 130 countries are exploring the idea of a central bank digital currency, according to a database from the Atlantic Council, a Washington, D.C.-based think-tank. So far, only three nations have fully launched one — the Bahamas, Jamaica and Nigeria.

"One of the things that this cryptocurrency revolution has brought to the forefront is that we need to do more innovation," said Karl Schamotta, chief market strategist with Corpay, which helps Canadian companies deal with currency risk.

"But at the same time, we also need to preserve safety and many of the features of the monetary system that have been created over centuries and tested out over time," he said.

A digital Loonie doesn't offer many advantages right now, said Schamotta, so he's not surprised the central bank has cooled its enthusiasm.