Carolyn Wilkins, the bank's senior deputy governor, said so in a keynote address entitled, "Money in a Digital World" at Wilfrid Laurier University in Waterloo, her alma mater. At the same time, she said that the bank is keeping a close eye on both benefits and drawbacks of digital currency.
Wilkins says Bitcoin and other digital currencies have a long way to go before they can truly circumvent central banks, since the daily number of transactions is still relatively low compared to debit and credit cards. She thinks that Bitcoin is not yet posing a systematic risk to Canada’s financial stability.
"Let me be clear, we are nowhere near this point today."
Although Wilkins didn't elaborate on how or when the Bank of Canada would ever issue its own digital currency, she didn't shy away from addressing a scenario where e-money could overtake conventional money. She said:
"In the very unlikely situation in which cryptocurrencies were used broadly, a significant proportion of economic transactions would not be denominated in Canadian dollars. This would reduce the bank's ability to influence macroeconomic activity through Canadian interest rates."
As a result of the growing popularity of Bitcoin in Canada, the Bank of Canada may ultimately take preemptive steps and revamp, or modernize, its oversight of payment methods. In the meantime, the Bank is watching patiently and avoiding any rash decisions.
Wilkins was appointed Senior Deputy Governor of the Bank of Canada for a term of seven years beginning 2 May 2014. As Senior Deputy Governor, she oversees the Bank’s strategic planning and operations and shares responsibility for the conduct of monetary policy as a member of the Bank’s Governing Council. Prior to her appointment, Wilkins was Adviser to the Governor, with a focus on the Canadian economy, its interaction with the financial system, and monetary policy. She also served as Secretary to Governing Council.
Recently, Andreas M. Antonopoulos promoted Bitcoin at the 11th meeting of the Canadian Senate Committee on Banking, Trade and Commerce, for their official consultative exercise "Study on the use of digital currency."
What do you think of the possible institutionalization of digital money in Canada and elsewhere? Comment below!
Images from Bank of Canada and Shutterstock.