Will CBDC Be a Success in Canada? Study Says It Depends on How It’s Incentivized
A new study by the Bank of Canada reveals that widely adopting Central Bank Digital Currency (CBDC) in a country where consumers already have a range of payment options could pose challenges. According to employee discussion papers published by the bank, most Canadians have access to various payment methods such as electronic transfers, online bill payments, and debit and credit cards, making it challenging to incentivize CBDC adoption. The research suggests that a well-connected group, comprising 98% of individuals with bank accounts and debit cards, may not find sufficient motivation to embrace CBDC.
The paper also examines potential scenarios that could justify the introduction of CBDC in Canada. These include the rise of a cashless society or the widespread use of alternative digital currencies like Bitcoin. However, the research finds that only a small percentage of consumers are currently part of the well-connected group, and these individuals would benefit from CBDC adoption only if a majority of consumers experience tangible benefits and actively encourage its use.
While the Bank of Canada is contemplating the launch of CBDC, the study indicates that addressing the needs of a minority of digitally underserved consumers through a digital currency might prove challenging. The central bank continues to study the feasibility and implications of CBDC, seeking input from Canadians on this matter. Its aim is to ensure that any potential digital currency caters to the needs of all consumers and contributes to a functional and inclusive financial system.