This report summarizes what we have heard to date, and how we will use it for what comes next.
What we did
Since 2020, we have engaged with Canadians and many stakeholders about the concept of a Digital Canadian Dollar. We gathered perspectives through:
- discussions with members of the financial sector
- focus groups
- discussions with civil society groups
- an online public questionnaire open to all Canadians
What we heard
We heard a diversity of views from different communities about a Digital Canadian Dollar.
- Financial sector stakeholders generally wanted more concrete details about how a digital dollar would work so they could better understand the potential impacts on their business models and overall financial stability.
- Focus group participants largely accepted the potential need for a digital dollar in the future but wanted more information on how exactly it would work.
- Civil society groups mainly supported a digital dollar if its design would remove existing barriers to accessibility and financial inclusion.
- Respondents to the public questionnaire were largely opposed to a digital dollar and to the Bank of Canada researching it. They were concerned about the impacts that a digital dollar could have on their rights.
Canadians and stakeholders provided feedback on the following general themes:
- accessibility and financial inclusion
- privacy
- continued access to bank notes
- security and technology
- digital dollar ecosystem
- financial stability
Accessibility and financial inclusion
Canadians who are underserved by the financial system, civil society groups and financial institutions that serve primarily rural, remote and Indigenous communities all shared ideas for how a digital dollar could better include the underbanked. They all identified gaps in existing digital payment offerings. Overall, civil society organizations cited universal access as the priority for a potential digital dollar.
Respondents to the public questionnaire were skeptical that a digital dollar could be inclusive and largely did not see a need to prioritize inclusion.
Advocates for financial inclusion raised concerns that the identification requirements for banking services present a barrier for many Canadians who do not have reliable access to government-issued identification. These advocates believed that a digital dollar should be accessible without the need for identification so it can be inclusive and universally accessible. More details can be found in Appendix: Discussions with civil society groups.
Privacy
We heard from focus group participants, civil society groups and respondents to the public questionnaire that a potential digital dollar should perform the functions of bank notes without the need to share personal information. Providing the personal information necessary to enable features that are not possible with bank notes, like automated payments and recovering lost funds, should be voluntary.
Respondents to the public questionnaire overwhelmingly valued the privacy and anonymity that bank notes provide and believed the Bank should not collect or have access to Canadians’ personal and spending information. Many of these respondents did not trust the Bank and other institutions to protect or respect their privacy and were concerned that privacy laws—such as the federal Privacy Act and the Personal Information Protection and Electronic Documents Act—do not offer sufficient protections.
Respondents preferred bank notes because they are not easily tracked. Respondents also said they felt that bank notes would continue to offer privacy and anonymity during transactions over the long term, no matter the government of the day. They were generally concerned about financial crimes being used to justify limiting privacy or anonymity and the effects that could have on other rights and freedoms, such as the freedom for people to make individual economic decisions for themselves.
Continued access to bank notes
Most Canadians we heard from placed high importance on having access to bank notes as currency backed by the central bank. This was because of their wide acceptance, universal availability and transactional privacy.
To ensure greater access to bank notes in the future, most respondents indicated that they would support imposing requirements on merchants to accept bank notes as a form of payment. Civil society groups noted that improving consumer access to and merchant acceptance of cash would help prevent marginalized Canadians from being further excluded from the economy.
Security and technology
Canadians and industry stakeholders were clear that a digital dollar must be secure. However, confidence in the Bank’s ability to provide the necessary cyber security varied significantly.
Civil society groups, focus group participants and some stakeholders from the financial sector were interested in using a digital dollar without an internet connection. They said that many circumstances exist where a digital form of payment that works offline, such as when internet services or electricity are unavailable, would be a significant benefit, both for practical resilience and for accessibility and inclusion reasons.
Respondents to the public questionnaire were largely skeptical of the Bank’s ability to provide cyber security, citing various cyber security failures by governments in general. In contrast, stakeholders from the financial sector were confident in the Bank’s ability and interested in the practical technological details about how the Bank would implement a digital dollar.
Digital dollar ecosystem
Financial sector stakeholders expressed a need for more information before they could adequately comment on a digital dollar ecosystem. Financial institutions showed a strong preference to play a role in the distribution of a possible digital dollar, like they do for cash.
Canadians felt that a digital dollar should be free to use like bank notes. Merchants and financial sector stakeholders identified specific costs they incur for bank notes, such as storage and transportation, but said that these costs are largely hidden from consumers. They wanted more information on any possible business expenses from a digital dollar.
Financial stability
Financial institutions were concerned that a digital dollar could replace bank deposits, reducing a source of funding for their operations. They also noted that reducing the physical barrier cash creates could accelerate potential bank runs during a crisis. These stakeholders required more information on the potential design of a digital dollar to evaluate these concerns. More details can be found in Appendix: Discussions with members of the financial sector.
What’s next
In an era of rapid digitalization, the Bank is undertaking the necessary work to be ready if Canadians’ payment preferences or needs change. Ultimately, the decision about whether or when to issue a digital dollar will be up to Canadians and their elected representatives in Parliament.
To prepare for the possibility that a digital dollar is needed and ensure that the Canadian payments system is ready for the future of the digital economy, the Bank will continue to engage with a wide range of stakeholders on the key issues and features that matter most to Canadians. There will be further opportunities for Canadians to provide input on a potential digital dollar.
Privacy
Canadians have a right to privacy, and any digital dollar must not compromise this right. The Bank will examine options for a digital dollar that:
- would not require Canadians to have identification, a bank account or to disclose private information to anyone to perform basic financial transactions—similar to bank notes and some pre-paid cards
- would allow Canadians to voluntarily provide some form of identification to help retrieve lost or stolen funds—like when opening a bank account
The potential design of a digital dollar would require an evaluation of the desired balance between maintaining privacy and preventing financial crimes. Deciding how to balance these objectives will be up to Parliament. The Bank will explore what is technologically feasible by gathering perspectives from a variety of groups, including government departments and agencies, civil liberties groups, the Office of the Privacy Commissioner of Canada and financial institutions, as well as privacy and inclusion experts.
Accessibility and inclusion
We will work with Canadians who are underserved by the financial system as well as civil society groups and accessibility experts to better understand the barriers Canadians face when trying to access financial services. We will also explore how a digital dollar could address these barriers, including physical, cognitive, economic and situational barriers.
In discussions with national Indigenous organizations, it was determined that out of respect for their capacity and priorities, engagement should be delayed until more substantive work had been done on a digital dollar. We will work with Indigenous organizations to determine how best to proceed and what issues matter most to them.
Security and technology
Canadians told us they trust the safety of cash. Based on that, we will continue our research into the security and technologies that could support a digital dollar, including how to provide one that could be used offline. This research will be supported by engaging with stakeholders with relevant expertise.
Digital dollar ecosystem
We will focus our efforts on exploring a model where the Bank would issue a digital dollar and provide the payment network. Financial institutions and other regulated entities such as payment service providers would handle all consumer- and merchant-related activities. This largely reflects the model used for bank notes: the Bank issues bank notes and entrusts the direct relationship with consumers and merchants to the financial sector. We will explore this model further with the financial sector and other interested stakeholders.
Financial stability
To mitigate the potential risk that a digital dollar replaces commercial bank deposits a digital dollar would not pay interest. We will continue to research the relationship between financial stability and a digital dollar, in line with the Bank’s core mandate to foster a stable and efficient financial system. We will work with government departments and agencies as well as the financial sector to better understand any potential impacts on financial stability.