Will Canada Adopt a Digital Dollar?
May 28, 2023
The Bank of Canada is studying the use of a digital dollar, writes Peter Watson.
The world is changing.
In the past people purchased goods and services with cash and sometimes by cheque. Often writing a cheque was followed by putting it in a stamped envelope and dropping it in the mailbox with the hope it arrived by the time the bill was due.
That seemed to work fine until we had an explosion of technology that introduced new ways to make life simpler. Cash is quickly becoming part of our history.
Modern-day commerce has shifted. Swipe a credit card or your cell phone and the payment is made and automatically recorded in your online statement.
That is easy for both consumers and retailers. That is the future of commerce.
In my opinion the risk of digital currencies is a concern for the Bank of Canada and for Canada’s large retail banks. If digital competitors take over commerce your organizations importance will diminish.
Retail bank branches mostly have low customer visits. Those banks have very expensive real estate that is underutilized. Technology companies providing digital alternatives will not be burdened with that excess overhead.
The Bank of Canada is surveying the public to determine the level of interest in a BOC digital dollar. The value of the dollar and the fact that it is backed by the federal government will not change.
That gives the potential of a BOC digital currency competitive advantage to some of the other currency options including crypto currency. To many people these payment methods seems a little like smoke and mirrors without the solid foundation of a strong financial backing.
Commerce has changed. It would not surprise me if the federal government asked the Bank of Canada to create a digital currency.
Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com