In a recent report, Bank of Canada highlighted some intriguing aspects of digital currency adoption, particularly the central bank digital currencies (CBDCs). The report, titled ‘Unmet Payment Needs and a CBDC’, hammers home the fact that Canadians do not perceive a compelling reason to shift from the robust and familiar foundation of cash, credit/debit cards and bank accounts to the less charted waters of digital coins minted by a central bank.
The central bank’s study gave rise to a speculative situation where cash ceases to exist, paving the way to recognise the potential role of CBDCs for the unbanked sections of the society. However, it was inferred that this hypothetical future could lead to discomfort in a population largely content with existing payment choices.
When it comes to cryptocurrency ownership, the likes of Bitcoin or Ether are even less embraced, indicating the early-adopter segment is indeed a miniature subset. The paper posited, “Even the well-connected consumers and early adopters would experience significant challenges meeting their payment needs without cash.”
Bank of Canada also highlighted a stark reality – if cash were to evaporate from the payment framework, most would double down on electronic payment options like debit or credit cards, cheques, and e-payment services. Such a scenario would severely impact customers primarily sustaining on cash payments.
While it recognised that many might find CBDCs intriguing on multiple fronts, the bank maintained that the barriers for its universal acceptance could be considerable. Both merchants and users might find the transition overwhelming.
Exploring the pathway for reducing this ‘digital divide’, the bank suggested several alternative modus operandi. Improving internet penetration, specifically in scarcely populated or remote zones, is one such recommendation. Additionally, offering low-cost banking options and enhanced collaboration with retail corporations, financial establishments, and payment service providers could catalyse smoother incorporation of digital payment methods into society.
However, a resounding emphasis was laid on the importance of maintaining tangible cash. The Bank of Canada stressed that even as they foster innovation, the bank should also secure the efficiency of the cash system. The bank notes, therefore, should remain a “simple method of payment and store of value,” with investments being channelled to deliver superior quality banknotes inspiring confidence among all Canadians.
Source: Cryptonews
