Bank Of Canada: Limited Incentives For Canadians To Use CBDC
According to a central bank discussion paper, most Canadians are okay with gaining access to financial services. Therefore they have little need to use a CBDC.
According to a new report from the Bank of Canada, the average Canadian needs more motive to adopt central bank-issued digital money, which could hinder its widespread acceptance.
The central bank examined a fictitious scenario where cash was essentially removed to determine what function a possible CBDC could serve in assisting the underbanked in the staff discussion paper released on August 10.
Given that Canadians don’t encounter significant obstacles to using financial services like bank accounts or debit and credit cards, it was discovered that most consumers would have “weak incentives” to use one.
Screenshot of the staff discussion paper. Source: Bank of Canada
According to the report, 90% of rural and urban homes in Canada have access to high-speed internet, and 98% of Canadian adults have a bank account. 87% of individuals also have a credit card.
However, it discovered that replacing cash with digital currency will also result in fewer payment options for tech-averse Canadians and an inability to make the most common payments for those who depend on money.
A CBDC’s projected low adoption rate would also make retailers less likely to want to accept one, further reducing its utility.
The article instead proposed non-CBDC-related strategies that could aid the underbanked more effectively, such as enhancing internet accessibility, boosting the availability of low-cost bank accounts, strengthening merchant involvement with distant areas, and continuing to provide cash.
The article emphasized that it was impossible to foresee how Canadians would respond to a CBDC and stated that more people might be interested in using it for several reasons.
Even if there was more demand than it appeared, the study concluded that the challenges for consumers and businesses to embrace a CBDC “appear to be significant widely.”
Cash remains the king.
The report also made a strong case for the currency’s value, stressing that offline payment options would only be in dire circumstances like severe weather or extensive power outages with cash.
According to the report, “this suggests the potential system-wide benefits of encouraging digital payment innovations that can operate offline as well as the importance of sustaining cash.”
According to the study, this hypothetical situation shows how crucial it is for the Bank of Canada to keep issuing cash and maintaining access to it.
The central bank had previously declared that it would continue to provide cash as long as there remained a need for it and that a CBDC would only be issued in response to the emergence of a society devoid of currency or the widespread adoption of international CBDCs or cryptocurrencies like Bitcoin BTC tickers down $29,410.
