Deputy Chairman of the Central Bank of Canada: “the coronavirus pandemic has accelerated the development of state cryptocurrency”

The deputy chairman of the Central Bank of Canada said that the COVID-19 pandemic has accelerated the development of the state cryptocurrency. The decision to release it could be made faster than anticipated.

According to a Reuters publication, Tim Lane, Deputy Governor of the Bank of Canada, said that while the pandemic has driven cryptocurrencies upward, the recent price surges look like “speculative mania” and these cryptoassets cannot be plausible alternatives to the currency of the future. He commented on the situation with the development of the state cryptocurrency of Canada.

“For several years, the Bank of Canada has been analyzing what circumstances could force Canada to decide to issue its own digital currency. The pandemic could lead us to make a decision earlier than we expected, ”Lane said.

While the pandemic has accelerated the work of the Central Bank of Canada to prepare for the potential launch of the digital Canadian dollar, Lane said it is not yet certain that this will happen.

“The decision to issue the state cryptocurrency has not yet been made,” he said.

He added that Canada is leading the development of a government cryptocurrency among other countries, but lags behind China, which is already testing the digital yuan among its citizens. During the Q&A session, Lane said China is unlikely to gain a first-mover advantage, as Canadians are unlikely to use the digital yuan for day-to-day shopping. However, the widespread government cryptocurrency of one country can be dangerous.

“We can certainly imagine a situation where other central banks will launch a digital currency that everyone can use in Canada,” he said. “If that happened … it could jeopardize the role of the Canadian dollar.”

According to the deputy chairman of the Central Bank of Canada, the release of the state cryptocurrency may be accelerated by the trend of withdrawal from cash, which is observed among citizens. However, it is not yet clear if this trend, as well as the “growth of faulty cryptocurrencies”, will continue after the end of the pandemic.

“Cryptocurrencies like bitcoin don’t pretend to be the money of the future,” Lane said. “The recent jump in their prices looks more like speculative mania than a trend.”

Lane added that while stablecoins have a lot of potential backed by secure assets, there are serious data privacy concerns. Especially if such cryptoassets are issued by tech companies that already benefit from customer data.

“If this business model were used as the basis for the dominant payment method in the economy, the issuer would gain control over a huge set of data, which would bring with it overwhelming bargaining power,” he said. “Essentially, a technology company will be able to control the global economy.”

Recall that in the fall, the Bank of Canada posted a vacancy for an economist with knowledge of digital currencies and financial technologies as part of an ongoing study of the possibilities of state cryptocurrency.

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