Bank of Canada finds widespread public hostility to CBDC

A Bank of Canada (BoC) report based on three years of public consultations with Canadians concerning digital currency, has found widespread opposition to the idea among the general public.

The BoC proposed a model where it creates both the central bank digital currency (CBDC) and the associated payment network, which could potentially work offline. Consumer and merchant activities would be handled by financial institutions and payment service providers, much as they currently distribute cash.

The central bank said a digital dollar will not pay interest, “to mitigate the potential risk that a digital dollar replaces commercial bank deposits”.

Privacy is a right for Canadians, and the central bank will reflect that in its digital dollar design. The central bank said it will investigate digital currency that “would not require Canadians to have identification, a bank account or to disclose private information to anyone to perform basic financial transactions”. Canadians could potentially volunteer identifying information when looking to restore lost funds, the bank said.

Ultimately, the decision about whether or when to issue a digital dollar will be up to Canadians and their elected representatives in Parliament

Bank of Canada

The exact balance struck between privacy and mitigating financial crime will be up to parliament, said the central bank, as will any decision to actually introduce a CBDC.

“Ultimately, the decision about whether or when to issue a digital dollar will be up to Canadians and their elected representatives in Parliament,” said the bank.

The consultations utilised focus groups, contacts in the financial sector and civil services, and an online questionnaire open to any Canadian. The online questionnaire received quite negative feedback.

“Respondents to the public questionnaire were largely opposed to a digital dollar and to the Bank of Canada researching it,” said the bank in the report, which was released on November 29. “They were concerned about the impacts that a digital dollar could have on their rights.” The vast majority of respondents agreed regulation would be needed to require that cash be maintained as a payment option.

Most respondents – 82% – said they “strongly disagree” with the central bank investigating digital currency, and most respondents said they don’t believe the central bank will take on board public concerns.

“When asked about overall sentiments regarding the concept of a digital Canadian dollar, 86% of the respondents expressed strong criticisms against it,” said the Bank of Canada. “More than half of the respondents (52%) indicated that they consider it a bad idea and have no intention of using it. Furthermore, they hoped that a digital dollar would never be issued.”

“Leave cash alone!” said one respondent.

“A digital dollar sounded great until we saw the Federal government freeze private bank accounts of its own citizens for supporting a political movement it disagreed with. I have no faith at all in the system anymore,” said another.

This respondent was referring to the federal government’s decision in February 2022 to invoke the Emergencies Act to disperse protests in Ottawa. Demonstrators representing sectors of the trucking industry had gathered for several weeks to protest Covid-19 vaccination mandates. The Emergencies Act allows the government to freeze bank accounts.

A respondent said, “I do not see the reason or benefit of a digital dollar. Cash is accessible to everyone. Cash is private, cash is senior friendly, cash is disability friendly, cash is as secure as the individual makes it, cash is there and readily available, and cash is already legal tender.”

Other respondents were more open to digital currency. “If it exists I will probably use it, but it’s no loss to me if it doesn’t exist. Also I don’t want to see the utility of cash further eroded,” said one participant.

“I believe that interoperability and the idea that I could send it to my relatives abroad and that they could exchange it easily to their own currency is very important,” said another. But most responses were negative and expressed that the digital dollar could mean government overreach.

“It’s the beginning of the end of freedom,” said one survey respondent.

The leader of the Conservative Party, the largest opposition party, also opposes a Canadian CBDC. In April 2022, a few months before becoming party leader, Pierre Poilievre told journalists, “a Poilievre government will ban a central bank digital currency and allow Canadians to have the economic and financial liberty that they deserve”.