The deputy Chairman of the Bank of Canada, Timothy Lane, said that the pandemic creates many prerequisites for the accelerated launch of the state-owned cryptocurrency.
Earlier, Lane said that the Bank of Canada is not going to create its own digital currency, as the country’s citizens are quite satisfied with the current payment system, which can be upgraded. The Central Bank of Canada expressed its readiness to develop its stablecoin only in case of extreme need. Now Lane believes that the coronavirus pandemic creates conditions that push for the development of a state-owned cryptocurrency, because extraordinary circumstances can come completely unexpectedly.
“We do not know what may happen in the future, so we should be proactive. We need to develop it now to know how the digital currency works from central banks, and how it can be managed, ” Lane said.
The Deputy Chairman of the Central Bank spoke about two scenarios that could prompt the government of Canada to issue its own stablecoin. The first scenario involves ending the use of cash in Canada, which will create economic inequality. Secondly, the issuance of a digital currency from the central bank may contribute to the excessive popularity of cryptocurrencies, thereby creating a threat to the Canadian dollar.
Judging by Lane’s observations of the market over the past nine months, the first option may be implemented much earlier than originally expected. The fact is that because of the pandemic, Canadians have become less likely to use cash.
“Perhaps the economic turmoil is a temporary phenomenon associated with the pandemic, or the beginning of a new trend. All this we will have to find out over time, we are closely monitoring the situation. In any case, we need to be prepared for any twists and turns, so we should continue research and development,” Lane said.
However, in a recent report, the Bank of Canada experts said that state-owned cryptocurrencies carry more risks than benefits. In addition, analysts of the central bank conducted another study, during which they concluded that financially literate citizens of the country rarely invest in digital assets.