OTTAWA – CD Howe Institute believes that the Bank of Canada should issue a digital currency that can be converted into cash.
In a new report, the think tank says that Canadian-dollar-linked stack coins can become attractive if they can be converted into cash issued by the Bank of Canada and are well-designed and well-regulated.
A stablecoin is a cryptocurrency linked to an underlying asset such as a fiat currency.
It believes that a digital currency from the Bank of Canada should be issued in token form with decentralized transaction settlement technology.
It says that bank-issued digital Canadian dollars can also encourage the private sector to introduce Canadian dollar-linked stack coins by enabling convertibility to take place digitally without having to rely on physical banknotes.
The report’s authors add that stablecoin platforms could access Bank of Canada’s liquidity facilities and deposit insurance to reduce the risk of running.
This report from The Canadian Press was first published on November 25, 2021.