Canada's central bank, the Bank of Canada (BoC), has issued a staff discussion paper in which described positive cases for issuing a central bank digital currency (CBDC).
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The watchdog noted in the document that a CBDC might be "beneficial and probably necessary" to ensure a competitive and vibrant digital economy. The BoC admits that a digital currency controlled by a central bank could not only increase welfare relative to the status quo, but also mitigate welfare loses.
Nonetheless, the digitalization of the economy could "aggravate competition problems" dominated by digital services. The bank claims more research needed in order to finalize whether it should issue its own digital currency or not.
The paper comes after Timothy Lane, Deputy Governor at Bank of Canada, said that the regulator will not issue its own digital currency (CBDC) as it did not see a "strong case" for it. However, the bank will continue studying on how its digital currency might look and work, Lane added.
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