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The Bank of Canada (BoC) has suspended the development of a retail central bank digital currency (CBDC) to concentrate on regulating the payments sector and modernizing national payment systems.
The Bank of Canada announced the decision to pause work on a retail CBDC, citing low public interest in adopting the digital currency. Additionally, several studies conducted by the BoC indicated that a digital Canadian dollar could pose certain risks to the country’s financial system.
According to its official website, the BoC will now prioritize the development of national payment systems. The regulator’s key objectives include modernizing payments infrastructure and strengthening regulation. Specifically, the bank plans to focus on research in the payments sector, an area that has undergone significant innovation in recent years.
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The Bank of Canada intends to further develop the Real-time Rail instant retail payment system, currently being built under Payments Canada. This system aims to accelerate and enhance the security of payments by providing market participants with more flexible solutions for everyday transactions.
Payments Canada is an association that operates the country’s payment clearing and settlement system. It unites more than 100 participants in the Canadian payments market, enabling the Bank of Canada to conduct large-scale research on a national scale.
Another critical area of the BoC’s work will be strengthening oversight of retail payments. Local legislation will require all payment service providers to register with the BoC starting in November of this year. From 2025, new operational risk management standards for payment providers will come into force.
The BoC remains prepared to continue working on the CBDC if sufficient public and political support emerges. The bank will be ready for the potential introduction of the digital Canadian dollar, and the accumulated knowledge and experience will prove valuable if such a decision is made.
Research on the retail CBDC in Canada has been ongoing since 2022.
