The Bank of Canada, the country's central bank, has just released a new report in which it talks about the possible risks and benefits of central bank digital currencies (CBDCs).
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In the document, which was published on Monday under the title "Security and convenience of a central bank digital currency," the institution says the country must first address and regulate the potential risks associated with CBDCs before the country launches one. In particular, the document states:
"An anonymous token-based central bank digital currency (CBDC) would pose particular security risks. These risks arise from how balances are aggregated and stored, how CBDC is used for transactions, and how various solutions such as e-wallets, crypto exchanges and banks compete to attract users."
However, the bank has gone one step further, offering possible solutions, including designing digital currency to limit balances or transfers, modifying liability rules as well as directing any and all security protocols chosen by the suppliers of aggregation solutions.
It must be noted the central bank of Canada still has not decided whether to launch a pilot test of a CBDC due to concerns about digital asset storage as a result of insufficient care of investment and the lack of regulated accountability.
Thus, the institution is calling for the adoption of strong measures before a CBDC is launched.