The Central Bank of Canada considers introducing a national cryptocurrency, claims the Senior Business Editor at 680 News Mike Eppel. During an interview, Eppel stated that various concerns are surrounding the cryptocurrency sector, including volatility and inadequate regulatory frameworks. In that regard, the Bank of Canada officials consider to apply the technology to banking and establish the new phase of how financial institutions process transactions.
Eppel stated: ‘The Bank of Canada wants to get ahead of the curve. They have this internal memo saying, yeah, eventually, they’re likely to launch some sort of crypto.’
According to the senior editor, the decision to cover the crypto sector is backed by the lack of regulation, an area in which the Bank of Canada would like to have influence. However, he believes that the negative side of this sort of adoption is that banks can use blockchain technology to track all of our transactions.
While the method of adopting blockchain technology and cryptocurrencies is unknown so far, Canada’s central bank likely plans to introduce a ‘Central Bank Digital Currency’ (CBDC), one of the most regulated forms of the disruptive new digital asset class.
CBDCs are developed by a number of countries, with China being possibly the first one to launch a national cryptocurrency by the end of this year, as rumored by some insiders. As for their rival, the Philadelphia Federal Reserve bank president Patrick Harker recently stated that the US will inevitably introduce a dollar CBDC.
An institutional tool to shut down Crypto?
If financial institutions were to develop CBDCs, they can certainly pressure the sector and go as far as to shut down public blockchain networks such as Bitcoin. The world-renowned economist Nouriel Roubini stated last year that banks could put a stop to cryptocurrencies by launching their own.
‘If a CBDC were to be issued, it would immediately displace cryptocurrencies, which are not scalable, cheap, secure, or actually decentralized’ said Roubini. Discussing the benefit of privacy by adopting non-bank cryptocurrencies, the economist stated that assets such as Bitcoin are not truly anonymous given the fact that everyone leaves a digital footprint by conducting a transaction.
Moreover, Roubini said that governments could attempt to put a complete stop to privacy-oriented projects in order to prevent criminals and terrorists from using crypto. Completely accurate in his predictions, several privacy coins have been delisted on some exchanges.
If cryptocurrencies are to reach global adoption, they will need to solve several scalability issues that prevent them from being used for more than just speculative investments. While crypto enthusiasts will stick to the original idea of decentralization and continue support projects such as Bitcoin and Ethereum, the rest of the world may adopt CBDCs if banks seriously consider becoming a part of the sector.