Canada says international collaboration is necessary to get the best out of central bank digital currency (CBDC) development. Countries like The Bahamas and Cambodia have already launched their sovereign digital currencies with China conducting live testing protocols.
Canada Working with G7 Partners on CBDC
According to Reuters, the Bank of Canada is seeking a coordinated global approach to CBDC development. Tiff Macklem, Canada’s central bank governor made this known on Thursday (October 29, 2020), adding that international collaboration is necessary to prevent CBDCs from being used by criminal elements.
To this end, Macklem says the Bank of Canada is working with fellow G7 nations to work out modalities for sovereign digital currencies. Commenting on the need to expedite action on CBDC development, the Canadian central bank governor added:
“If another country has one and we don’t, that could certainly create some problems. So, we want to make sure we’re ready. Currencies move across borders, and so we certainly wouldn’t want to be surprised by some other country. It will be important for us to share information on what each of us is doing, is planning on, and on the timeline that we might do it on.”
As previously reported by the Bank of Canada is looking to employ CBDC researchers as part of its digital currency development plans. Thursday’s call for a coordinated global approach to CBDC mirrors the views espoused by some Bank of Canada analysts back in June who called for greater accessibility for CBDC models.
Already, international finance organizations like the Bank for International Settlements (BiS) have announced plans to test experimental digital currencies. Asian countries like Japan and South Korea also have CBDC trials scheduled for 2021.
Indeed, China’s accelerated CBDC development appears to have been a shot in the arm for fellow Asia Pacific (APAC) nations. In China, the countries digital currency electronic payment (DCEP) system is already in several advanced testing stages.
Outside Asia, commercial banks and other financial institutions are testing an experimental digital currency system developed by the Bank of France. While arguing against the necessity for a retail CBDC, Australia’s central bank says it is researching a wholesale digital currency system.
Given the growing attention surrounding CBDCs, some financial analysts say sovereign digital currencies may usher in another economic paradigm as profound as the Bretton Woods Agreement of 1944.