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We need to innovate to stay in the game Bank of Canada presentation

Murchison, who is on secondment at the Caisse de dépôt et placement du Québec, directed questions to the Bank of Canada, which declined an interview request. In an email to The Logic,spokesperson Louise Egan said the bank has not yet decided whether it will launch a digital currency, and that the question of sharing information with police and tax authorities is “among the many issues that continue to be assessed by Bank researchers.”

Egan also said the bank is aware of more potential downsides to issuing its own digital currency than the one listed in the report, including a reputational risk for the bank if it issues an e-money that is not widely used, or is used, but for illegal activity.

She did not directly answer questions about whether a digital currency issued by the Bank of Canada would include the specific details included in the presentation.

Asked if the project had concluded and if the bank would be issuing a currency, Egan said its “research on this topic is ongoing.” Scott Hendry, the bank’s senior director for financial technology, now oversees the bank’s digital currency research.

The presentation suggests two deployment options for a digital currency: token-based and account-based. It warns that banknotes are becoming obsolete as a means of payment, creating problems for the banking system as a whole: “The time may come that merchants/banks find it too costly to accept banknotes.”

Photo by Shannon VanRaes/Bloomberg files

If that happens, “ordinary Canadians would lose access to central bank money,” but the bank’s ability to carry out monetary policy and act as a lender of last resort would not be affected, it states. However, those functions could be threatened by the rise of cryptocurrencies, according to the presentation.