Canada Halts Digital Dollar Amid Global CBDC Development Surge

Canada has allegedly halted its Central Bank Digital Currency (CBDC) initiative, which was launched in 2017.

As per a September 18 CBC news article, after several years of exploring the feasibility of a digital Canadian dollar, the central bank of the country has opted to withdraw from the project.

Bank of Canada Reevaluates Digital Currency Strategy

The CBDC initiative was initiated in response to the swift digital transition and evolving payment preferences among Canadians. In 2022, the nation’s central bank also conducted a public consultation to gather insights regarding the potential of virtual currency.

However, a subsequent report released by the institution in November 2023 reflected that while Canadians were aware of CBDCs, they “struggled” to grasp the reasoning behind a digital version of the currency.

A follow-up online survey revealed that nearly 87% of respondents indicated they would never utilize a digital Canadian dollar. Additionally, 92% expressed that they would never prefer CBDCs over traditional payment methods.

Concerns regarding cybersecurity threats and privacy issues were also raised, with 87% expressing doubts about the Bank of Canada’s capability to safeguard digital currency users from cyber threats.

The fiscal authority has consistently claimed that the digital Canadian dollar would not replace physical cash, but rather aimed to simplify online purchases and fund transfers.

Currently, it appears even less inclined towards the concept, reportedly shifting its focus to policy research and analysis to find methods to adapt to the evolving local and global payments ecosystem.

Global CBDC Interest Continues to Rise

This reported change in direction comes at a time when global interest in CBDCs is on the rise. Three nations—the Bahamas, Jamaica, and Nigeria—have fully rolled out such initiatives and are now working on broadening their applications.

Moreover, data from the Atlantic Council’s CBDC tracker indicates that as of September 2024, 134 countries and currency unions—which account for 98% of global GDP—are investigating central bank-issued digital currencies.

Industry analysts suggest that these projects have surged in response to geopolitical events, such as Russia’s invasion of Ukraine. Currently, there are 13 cross-border initiatives underway, including Project mBridge, which connects banks in China, Thailand, and other nations.

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