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Last updated: June 19, 2025, 17:29 | Written by: Joseph Lubin

The global race towards central bank digital currencies (CBDCs) has been gaining momentum, with many nations exploring the potential benefits and implications of introducing a state-backed digital currency.However, the Bank of Canada has taken a slightly different stance. The decision, which some see as a retreat from innovation, signals that the central bank will not be moving forward with a digital version of the Canadian dollar at least for now. In an official statement on Thursday, the Bank of Canada announced it was scaling down its work on a retail central bank digital currency, citing that itsAfter years of dedicated research and public consultations, the central bank has announced that it currently sees no compelling reason to move forward with plans for a Canadian CBDC, at least not in the immediate future. The Bank of Canada released a report in November 2025 on its public consultations toward the possible development of a digital Canadian dollar. As a central bank digital currency (CBDC), a digital Canadian dollar would constitute a digital version of the current Canadian dollar. It would provide features and digital capabilities to Canada sThis decision, revealed by Governor Tiff Macklem himself, signals a pause, not necessarily a complete abandonment, of the digital dollar project. We've been exploring a digital form of the Canadian dollar, also known as a central bank digital currency (CBDC), to be ready in case it is needed in the future. Find out about the research we completed and about what we're focused on as the payments landscape evolves.It reflects a careful consideration of public sentiment, existing payment infrastructure, and the overall need for a digital alternative to the Canadian dollar.This article delves into the Bank of Canada's reasoning, the findings of its public consultations, and the future prospects of a digital Canadian dollar, exploring the underlying factors that have shaped this decision and what it means for the future of payments in Canada. institutions on a digital Canadian dollar . In February 2025, the Bank of Canada announced a . contingency plan. to build our capacity to issue a digital Canadian dollar if the need were to arise. The need for a digital dollar doesn t exist yet, but we re getting ready in case one day Parliament and the Government of Canada ask us to issue one.We'll examine Canadians' trust in current payment methods, potential benefits of a CBDC, and the economic considerations at play. The Bank of Canada doesn t see a compelling case to move forward with plans for a central bank digital currency (CBDC) after years of study, governor Tiff Macklem said Tuesday. As part ofWhat does this mean for you as a Canadian consumer?

The Bank of Canada's Stance on a Central Bank Digital Currency

The Bank of Canada's decision not to proceed with a central bank digital currency (CBDC) at this time is rooted in several key factors.The primary reason is the absence of a pressing need for a digital dollar. Digital Canadian Dollar Public Consultation: Report PageCanadians already have access to a robust and efficient payment system, with widespread adoption of debit cards, credit cards, and digital payment platforms.This existing infrastructure adequately serves the needs of most consumers and businesses, making the introduction of a CBDC less urgent.In a recent statement, the Bank explicitly stated they don't see a compelling case to move forward at this moment.

Furthermore, the Bank of Canada's research revealed a lack of strong public support for a digital dollar. and stakeholder organizations, the Digital Dollar Project sees piloting a US digital dollar across a range of use cases as a critical and prudent initiative for the United States to begin now. The Project views the infrastructure underpinning the US dollar as a critically important public goodPublic consultations indicated that a significant majority of Canadians are skeptical about the need for a CBDC, with many expressing concerns about privacy, security, and the potential for government surveillance.This lack of public enthusiasm has undoubtedly influenced the Bank's decision to proceed cautiously.

Public Consultation: Skepticism Towards a Digital Canadian Dollar

The Bank of Canada's extensive public consultations on a potential digital Canadian dollar revealed a significant level of opposition.More than 80% of respondents expressed strong opposition to the Bank researching and developing the capability to issue a digital dollar.This widespread skepticism underscores the challenge of introducing a new payment system in a country where existing options are already well-established and trusted.

Several factors contributed to this skepticism, including:

Privacy concerns: Many Canadians worry about the potential for the government to track their transactions and monitor their financial activities.
Security risks: Concerns exist about the vulnerability of a digital dollar to hacking, fraud, and cyberattacks.
Lack of understanding: Some respondents simply did not understand the purpose or benefits of a digital dollar, leading to uncertainty and apprehension.
Trust in existing systems: Canadians generally have a high level of trust in the existing banking system and payment methods, reducing the perceived need for a new alternative.

This feedback played a crucial role in the Bank's decision to scale back its work on a retail CBDC.It highlighted the importance of addressing public concerns and building trust before moving forward with any plans for a digital dollar.

The ""Contingency Plan"" and Future Preparedness

Despite the current lack of a strong case for a CBDC, the Bank of Canada is not completely abandoning the idea. Amid the global CBDC race, the Canadian central bank does not currently see a strong case for issuing a state digital currency. The Bank of Canada does not see a strong reason for issuing aIn February 2025, the Bank announced a ""contingency plan"" to maintain its capacity to issue a digital Canadian dollar if the need arises in the future.This plan involves continuing research and development efforts to ensure that the Bank is prepared to act quickly if circumstances change. Historically interest rates of the Bank of Canada follow closely the movements of the U.S. Federal Reserve. This has changed dramatically over the last few months. From a stable 5% in April 2025 the interest rate in Canada has dropped to 3%. This was confirmed in a recent statement from Bank of Canada Governor Tiff Macklem.Governor Macklem emphasized that the need for a digital dollar doesn't exist yet, but the Bank is getting ready in case Parliament and the Government of Canada request one.

Why a Contingency Plan?

Several potential scenarios could trigger the need for a CBDC in Canada:

Decline in cash usage: If cash usage continues to decline significantly, a digital dollar could provide a public alternative for those who rely on cash for payments.
Rise of private digital currencies: The increasing popularity of cryptocurrencies and stablecoins could pose a challenge to the Canadian dollar's sovereignty and stability. OTTAWA The Bank of Canada s public consultations on the creation of a digital Canadian dollar reveal most respondents are opposed to it. The central bank released its findings Wednesday that show more than 80 per cent of respondents strongly opposed the Bank of Canada researching and building the capability to issue a digital dollar.A CBDC could provide a safer and more regulated alternative.
Innovation in payment systems: A digital dollar could foster innovation in the payment ecosystem, enabling new and more efficient payment solutions.
Geopolitical factors: Other countries adopting CBDCs could create a competitive disadvantage for Canada if it does not have a similar option available.

By maintaining its preparedness, the Bank of Canada can ensure that it is ready to respond effectively to these potential developments.

Exploring the Potential Benefits of a Digital Canadian Dollar

While the Bank of Canada currently sees no compelling need for a digital dollar, it acknowledges the potential benefits that a CBDC could offer.A digital Canadian dollar, as a digital version of the current currency, would bring digital capabilities to Canadian institutions.

Potential Benefits Include:

Enhanced Efficiency and Innovation: A CBDC could streamline payment processes, reduce transaction costs, and foster innovation in the financial sector. Canada is the latest country to start the central bank digital currency conversation. The Bank of Canada is asking for public feedback on a digital dollar. According to a press release from the bank, Canadians have until June 19 to weigh in on how a digital dollar would be used, what security features should be implemented and concerns that citizens may have around the issuance of a CBDC.For example, smart contracts could automate payments and reduce the need for intermediaries.
Financial Inclusion: A digital dollar could provide access to financial services for underserved populations, such as those who do not have bank accounts.A digital wallet could be easily accessible via a mobile phone, making it easier for people to participate in the digital economy.
Improved Security and Transparency: A CBDC could be designed with advanced security features to protect against fraud and cyberattacks.The transparent nature of blockchain technology could also enhance accountability and reduce the risk of illicit activities.
Monetary Policy Implementation: A digital dollar could provide the Bank of Canada with new tools to implement monetary policy more effectively. We explore the consumer value proposition of a hypothetical Digital Canadian Dollar, adoption considerations and the users who would benefit most from this potential new payment method. We employ a design-thinking consultation methodology, allowing participants to interact with research prototypes of increasing complexity to reveal user preferences, constraints and adoption influences.For example, the Bank could directly distribute stimulus payments to citizens through digital wallets.

These potential benefits highlight the importance of continuing research and development efforts, even in the absence of an immediate need for a CBDC.Understanding these potential advantages helps the Bank of Canada stay prepared for future scenarios where a digital dollar might become essential.

Addressing Concerns and Building Trust

A crucial aspect of introducing a digital Canadian dollar is addressing public concerns and building trust.The Bank of Canada's public consultations revealed significant apprehension about privacy, security, and government surveillance.Overcoming these concerns will be essential for gaining public support for a CBDC.

Strategies for Building Trust:

Transparency: The Bank of Canada needs to be transparent about the design and implementation of a digital dollar, explaining how it will protect privacy and security.Openly communicating the purpose, benefits, and risks of a CBDC can help alleviate concerns.
Privacy-preserving technologies: Incorporating privacy-enhancing technologies, such as zero-knowledge proofs, can help protect users' privacy while still allowing for efficient transactions.
Robust security measures: Implementing strong security protocols and encryption techniques can safeguard against hacking and fraud. The Bank of Canada building is pictured in Ottawa in December 2025. THE CANADIAN PRESS/Sean Kilpatrick. Since transactions are digital, it is possible to envision a future in which the CanadaRegular security audits and penetration testing can help identify and address vulnerabilities.
Public education: Educating the public about the benefits and risks of a digital dollar can help dispel misinformation and foster a better understanding of the technology.
Pilot projects: Conducting pilot projects with limited scope and duration can allow the Bank of Canada to test the technology and gather feedback from users before a full-scale rollout.

By addressing these concerns and building trust, the Bank of Canada can increase the likelihood of successful adoption if it decides to move forward with a digital dollar in the future.

The Consumer Value Proposition of a Digital Canadian Dollar

Understanding the consumer value proposition is critical for successful adoption of a digital Canadian dollar. The Bank of Canada s research revealed mixed views on a digital Canadian dollar and highlighted Canadians enduring trust in cash and card payments. Canadian consumers showed skepticism towardFor consumers to embrace a new payment system, it must offer clear advantages over existing options, such as cash, debit cards, and credit cards.According to the Bank of Canada, a hypothetical Digital Canadian Dollar should provide real value to the end user.

Potential Value Propositions for Consumers:

Convenience: A digital dollar could offer a convenient and seamless way to make payments online and in-person.Mobile wallets and contactless payments could simplify transactions and reduce the need for physical cash.
Lower Costs: A CBDC could reduce transaction fees and other costs associated with existing payment systems.This could benefit both consumers and businesses, especially those that rely on frequent small-value transactions.
Accessibility: A digital dollar could provide access to financial services for underserved populations, such as those who do not have bank accounts.A digital wallet could be easily accessible via a mobile phone, making it easier for people to participate in the digital economy.
Security: A CBDC could be designed with advanced security features to protect against fraud and cyberattacks.This could provide consumers with greater peace of mind when making digital payments.
Innovation: A digital dollar could foster innovation in the payment ecosystem, leading to new and more efficient payment solutions.This could benefit consumers by providing them with more choices and better services.

By focusing on these value propositions, the Bank of Canada can increase the likelihood of successful adoption if it decides to move forward with a digital dollar.

The Digital Dollar Project and International Context

While the Bank of Canada is taking a cautious approach, other countries are actively exploring and piloting CBDCs.The Digital Dollar Project, for example, advocates for piloting a US digital dollar across various use cases.This project views the infrastructure underpinning the US dollar as a critical public good, highlighting the strategic importance of digital currency initiatives.

The global CBDC landscape is rapidly evolving, with countries like China, Sweden, and the Bahamas already launching or piloting digital currencies.These initiatives are driven by a variety of factors, including:

Increased competition from private digital currencies: Governments are concerned about the potential for cryptocurrencies and stablecoins to undermine their control over monetary policy.
Declining cash usage: As cash usage declines, central banks are looking for ways to ensure that citizens have access to a public form of digital money.
Financial inclusion: CBDCs can provide access to financial services for underserved populations.
Innovation and efficiency: CBDCs can streamline payment processes and foster innovation in the financial sector.

The Bank of Canada is closely monitoring these international developments to inform its own research and development efforts.While it may not be leading the charge on CBDCs, it is important for Canada to remain informed and prepared for potential changes in the global financial landscape.

Impact of Interest Rate Changes on the Digital Dollar Discussion

While seemingly unrelated, shifts in interest rates can influence the conversation around a digital Canadian dollar.Historically, interest rates set by the Bank of Canada have closely mirrored those of the U.S.Federal Reserve.However, recent months have seen a divergence.While previously stable at 5% in April 2025, the Canadian interest rate dropped to 3%, a move confirmed by Bank of Canada Governor Tiff Macklem.

Here's how these changes might impact the digital dollar discussion:

Economic Stability Focus: Lowering interest rates often aims to stimulate economic activity.The Bank of Canada might prioritize addressing immediate economic concerns over long-term projects like a CBDC when faced with economic uncertainty.
Alternative Investment Landscape: Fluctuations in interest rates can influence investment decisions.A lower interest rate environment might make alternative investments, including digital assets, more attractive, potentially increasing the urgency for a CBDC as a regulated alternative.
Government Spending Priorities: Economic conditions can influence government spending priorities.If the economy weakens, funding for CBDC research and development might be reallocated to more pressing needs.

Therefore, while the Bank of Canada's decision on a digital dollar isn't solely based on interest rate movements, these economic indicators play a role in shaping the overall context and influencing priorities.

Conclusion: A Pause, Not a Full Stop

In conclusion, the Bank of Canada's decision to not proceed with a digital dollar, at least for now, is a calculated one.Driven by a lack of compelling need given the existing efficient payment systems, coupled with public skepticism and concerns over privacy and security, the Bank has opted to scale back its efforts.However, this is not a complete abandonment of the project.The Bank of Canada is maintaining a ""contingency plan,"" continuing research and development to be prepared should the need arise in the future due to declining cash usage, the rise of private digital currencies, or other geopolitical or innovative factors.Understanding the potential benefits of a CBDC, such as enhanced efficiency, financial inclusion, and improved security, remains a key focus.Addressing public concerns and building trust through transparency, privacy-preserving technologies, and public education will be crucial if the Bank decides to revisit the idea of a digital Canadian dollar.The Bank of Canada’s approach is a measured one, balancing innovation with public sentiment and economic realities.The key takeaway is that while a digital dollar is not on the immediate horizon, the Bank of Canada is staying informed and prepared for a future where it might become a necessity.Remember to stay informed and follow official releases from the Bank of Canada for the most up-to-date information on this evolving topic.