According to the Bank of Canada, Canadian CBDC could be a source of innovation. It could eliminate transaction fees from debit or credit cards.
Canada’s central banks published a study that outlines why countries can issue their own digital central bank currency (CBDC).
Canadian CBDC outlined two scenarios
The document described two possible scenarios for CBDC to be issued in the near and future. One scenario assumes that citizens won’t use cash as often. The second assumes that a digital currency, whether public or privately owned, could be adopted on the marketplace so that it threatens Canada’s sovereignty.
Although both options seem unlikely shortly experts, say that stablecoin regulation is gaining popularity. The study revealed that stablecoins and cryptocurrencies are being used in Canada by “a few enthusiasts.”
This document also confirmed that CBDC could have many benefits. Digital currency technology has been recognized to provide the same level of security as cash and allow cbdc use in online payment systems, peer-to-peer transactions, and online payment.
Smart contracts could also be supported by CBDC, which would allow specific processes to occur automatically in the country. Experts concluded that smart contracts could pose a risk to users because smart contract developers will likely be independent of the CBDC banking platform. If the conditions do not perform the contract, this could pose a problem. Smart contracts need further research.
CBDC is what the world needs
Canada isn’t alone in being able to implement CBDC. Federal Reserve Chairman Jerome Powell, speaking to Congress last week, stated that there would be no need for stablecoins and cryptocurrencies to implement a digital U.S. currency. An informational document on the risks and benefits associated with the digital dollar will likely be released in September.