Bank of Canada Halts Digital Dollar Project Amid Global Surge in CBDC Development

Canada has reportedly paused its Central Bank Digital Currency (CBDC) project, which started in 2017.

According to a September 18 CBC news story, following years of research into the potential for a digital version of the Canadian dollar, the local central bank has decided to move away from the initiative.

Bank of Canada Rethinks Digital Currency Plan

The CBDC project was started in response to rapid digitalization and changing payment habits among Canadians. In 2022, the country’s central bank also held a public consultation to gather opinions on the potential of virtual currency.

However, a subsequent report released by the institution in November 2023 highlighted that while Canadians were familiar with CBDCs, they “struggled” to understand the rationale for a virtual version of the country’s fiat currency.

In a later online survey, nearly 87% of participants said they would never use a digital Canadian dollar. A further 92% stated that under no circumstances would they ever prefer CBDCs over existing means of payment.

Cybersecurity threats and privacy issues were also raised. 87% voiced concerns over the Bank of Canada’s ability to protect digital currency users against cyber attacks.

The fiscal regulator has always insisted that the digital Canadian dollar would not replace paper notes, but it was meant to simplify online purchases and the transfer of funds.

Now, it seems even less committed to the idea, reportedly pivoting its attention to policy research and analysis to find ways to adapt to the changing local and global payments landscape.

Global CBDC Momentum Continues to Grow

The reported shift in priorities comes even as the world is seeing increased interest in CBDCs. Three countries—the Bahamas, Jamaica, and Nigeria—have fully launched such products and are now working to expand their use.

Additionally, data from the Atlantic Council’s CBDC tracker shows that as of September 2024, 134 countries and currency unions—representing 98% of global GDP—are exploring central bank-issued digital currencies.

Industry watchers say that such projects have increased as a result of geopolitical events like Russia’s invasion of Ukraine. There are now 13 cross-border initiatives in progress, including Project mBridge, which links banks in China, Thailand, and other nations.

China’s digital yuan pilot remains the largest globally, with transactions reportedly totaling 7 trillion yuan (approximately $986 billion) as of June 2024. That number is nearly quadruple last year’s total.