A detailed paper exploring the potential impact of CBDCs on the Canadian payment ecosystem has highlighted that there would need to be widespread engagement with the digital currency for its benefits to reach the whole economy.
The all-encompassing paper shone a light on the importance of financial inclusion, something it claimed would still be addressed in a cashless environment.
The Bank of Canada discussion paper stated that consumers that are averse to embracing technology still remain and need to be accounted for should the country embrace a digital currency.
Meanwhile, it also revealed that whilst less than 5% of respondents reported using only cash to make purchases in the past week, these consumers were twice as likely to be unbanked. The paper described the cash-dependent cohort of Canadians as representing a small part of the population.
Whilst the numbers of those that are underbanked in Canada is small, for a CBDC initiative to be successful in its adoption would need to be widespread across society.
It emphasised that if the most vulnerable are to benefit from the implementation of a CBDC, its growth would need to be driven by the vast majority of consumers in the region.
The region has experienced a significant growth in the shift to a digital economy – something it believed was largely accelerated by the pandemic, as an increasing number of consumers adopted digital payments and banking tech.
Furthermore, it led to the paper exploring the consequences of a worst case scenario. The paper said: “Without cash, a widely used offline method of payment available for any consumer segment would no longer exist, which could be especially important if a network or power outage occurred.
“A universal payment outage is unlikely, however, given that the electronic payments landscape in Canada is diversified, is subject to stringent resilience standards and operates across several payment rails.”