What you use to pay for a cup of coffee could look very different in the future.
As people move towards regularly paying with plastic instead of paper, the Bank of Canada (BoC) is preparing itself for a predominantly digital future.
Canada’s central bank is exploring a new form of currency and wants your thoughts on it.
The currency is called a central bank digital currency (CBDC), or a digital Canadian dollar.
“As Canada’s central bank, we want to make sure everyone can always take part in our country’s economy. That means being ready for whatever the future holds,” said Senior Deputy Governor Carolyn Rogers in a statement.
📣Hey Canada, we need your input!
Our public consultation on a potential #DigitalCanadianDollar is now LIVE. #HaveYourSay by June 19: https://t.co/p8BdG3tQ9h pic.twitter.com/vKRoBfAngu
— Bank of Canada (@bankofcanada) May 8, 2023
Before you share your input on this new currency, here’s everything you need to know.
How would it work?
A digital Canadian dollar would simply be a digital version of the cash in your wallet.
You’d be able to use it to buy everyday things like groceries, home decor, or a new fit.
The central bank says that what separates it from cash is that you wouldn’t need to carry multiple bills or change. Gone would be the days of accidentally dropping coins as you hurriedly try to pay at check out.
Like a bank card, the digital Canadian dollar would work for in-person and online purchases. You’d also be able to easily transfer money between family and friends, and businesses could use it to pay each other.
The BoC is also looking at ways for it to be useable when there’s no internet available. So, you won’t have to worry about not being able to pay for things if another network outage happens.
Where would you store the digital dollar?
The BoC says you’d keep the digital cash securely on a phone, a card, or another device like a tablet.
It stressed that the digital dollar would not replace physical cash.
“Just like the cash in your wallet, it wouldn’t earn interest. But it would be secure and private,” the central bank explained in a YouTube video.
Is the digital dollar a cryptocurrency?
In short — no, it’s not.
The value of cryptocurrencies like Bitcoin goes up and down quickly and often relative to Canadian currency. They also have expensive transaction fees, take a long time to process, and have limited options if things go wrong.
The BoC says that in contrast, a digital Canadian dollar’s value would not change, and it would be backed by the central bank the same way that cash is.
“That means $10 in digital Canadian dollars would always have the same value as a $10 bank note,” explained the organization. “Our goal is to design a digital Canadian dollar that would be fast and low cost to use, just like cash is now.”
When will it be available?
The central bank says it doesn’t see a need for the digital Canadian dollar right now. However, it recognizes that people tend to use cash less often these days and that most payments are already digital.
“If this trend continues, there may come a time when cash is not widely accepted in day-to-day transactions. That might be the tipping point when a digital dollar could be needed,” explained the BoC.
That’s why it has launched a public consultation, encouraging Canadians to share their thoughts on the new form of currency, and what features they’d want to see from it.
You can complete the survey here.