By Michael Lee/CTVNews.ca Writer
Toronto, Ontario (CTV Network) — A Canadian digital currency, effectively a virtual version of cash, could bring a number of benefits for the country – as well as potential issues that governments and citizens need to watch for – one expert says.
The Bank of Canada is in the process of gathering input from Canadians on what a possible digital currency, also called a central bank digital currency, could look like. The online survey runs until June 19.
“With other cryptocurrencies, they have their own mechanisms to govern and they operate on the internet,” Ori Freiman, a post-doctoral fellow at McMaster University’s Digital Society Lab, explained to CTV’s Your Morning on Friday.
“With central bank digital currency, it’s completely controlled by a central bank and therefore regulated, and it will most likely have its own payment infrastructure, so it’s completely different.”
HOW WOULD IT WORK? A video from the Bank of Canada says a digital currency would hold the same dollar value as cash, but without the need to carry multiple bills or change. It could also be used for both in-person and online purchases.
Similar to holding cash in your wallet, you would not earn interest on your digital currency, the Bank says.
Depending on the design, a digital currency could be stored on a phone, debit-style card or other device, and even work without the internet.
Freiman, whose work has focused in part on the potential democratic challenges of central bank digital currencies, says the technology holds a lot of positive potential, including the ability to trace transactions and fight organized crime and money laundering.
Governments could also use it for specific financial benefits tied to food or rent.
WHAT ARE THE CONCERNS? While he does not want to “demonize” the technology quite yet, Freiman shared his concerns over how some governments could abuse a digital currency.
“Governments everywhere, in principle, like to use the tools that are on the tables, so we feel that gradually, governments will be able to surveil and control the financial transactions of the citizens,” he said.
“That means that they will be able to profile people according to their transactions, locate social activism and political dissidents, and act against them. So, it’s about civil liberties and democracy.”
The U.S. think-tank Atlantic Council says 11 countries have launched their own digital currencies to date, including Jamaica, the Bahamas, Nigeria and eight eastern Caribbean nations, with more than 100 others in various phases of exploration or development.
While the Bank of Canada says it does not see a need for a digital currency now, it is preparing for the potential need for one should cash be not as widely accepted in everyday transactions, creating issues for those who do not have a bank account, for instance.
The Bank also says having a digital currency could help protect the economy “by ensuring Canadians always have an official, safe and stable digital payment option in the Canadian dollar.”
The Bank of Canada survey can be found here. survey.forumresearch.com/SE/1/BCA1
With files from The Canadian Press.
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