FP morning note on digital currency Good morning,
A lot of Canadians are willing to try out a Bank of Canada digital currency one day, but they're also pretty nervous about the potential pitfalls, new research suggests.
A majority of people, or 59 per cent, say they'd use a digital currency from Canada's central bank, although most don't seem overly enthusiastic about it, according to a recent survey from WealthRocket, a personal finance website. Of that 59 per cent, 43 per cent say they'd be "somewhat willing" to use the coin, compared to 11 per cent who are "very willing" and five per cent who are "extremely willing."
People appear to have a lot of fears around the safety of a potential digital Canadian dollar, and worries about fraud top the list for more than half. Another 53 per cent fear a central bank digital loonie would heighten the risk of cyberattacks, while 44 per cent are afraid their private data could be breached. Just over half think the Bank of Canada could be successful in keeping their data safe when using a digital dollar.
Others are more concerned about what such a coin would mean for the future of cash in Canada, and 45 per cent say they're concerned it could end up eliminating physical currency altogether. Meanwhile, most don't seem too keen on using digital money in place of cash when making purchases, and only a quarter say they'd jump right in and do so.
Some also harbour fears a crypto loonie could cause them to lose control over their finances. Many are also worried about other "unintended consequences," which might include monitoring by the government. “The biggest concern is that gradually, a future government would have access to the transactions of citizens,” Ori Freiman, a post-doctoral fellow at McMaster's University Digital Society Lab, said in WealthRocket's report. “And that would be a nightmare for democracy and civil liberties, and potentially for human rights.”
Canadians need not be too concerned just yet. The Bank of Canada has made clear it doesn't plan to introduce a central bank-backed digital dollar any time soon, but it's also exploring the option, just in case. The bank recently asked for public input on the concept in a survey that ran from May until June 19, with the results set to publish later this year. “As Canada’s central bank, we want to make sure everyone can always take part in our country’s economy,” senior deputy governor Carolyn Rogers said in a press release announcing the poll in May. “That means being ready for whatever the future holds.”
The possibility that digital currencies, either private or issued by other central banks, could become common in everyday transactions has been a source of concern for the Bank of Canada in recent years. Policymakers contend widespread uptake risks destabilizing the Canadian dollar, ultimately posing a threat to the financial system. The central bank has been researching a digital loonie since at least 2013 as cryptocurrencies grew in popularity, and joins at least 100 other countries currently exploring the pros and cons of central bank-backed digital money.
Still, the Bank of Canada says a digital dollar isn't necessary at this point and physical money is here to stay for as long as people want to use it.
"Cash isn’t going anywhere," it said in May.