Central Bank Digital Currencies (CBDCs) have been gaining prominence around the world over the last couple of years and Canada has not been left out. However, unlike some countries where these central bank-issued digital currencies seem to be picking up steam, Canadians have not been as welcoming. To this end, the Bank of Canada has carried out a new study to figure out what the hindrances are when it comes to CBDC adoption in the country.
The Roadblocks To CBDC Adoption
In the discussion paper titled “Unmet Payment Needs and a Central Bank Digital Currency,” the Bank of Canada highlights that one of the prominent factors serving as a hindrance to CBDC adoption in the country is that Canadians do not really have a need to.
In contrast to underdeveloped and developing countries where the main pain points are lack of access to the internet and the devices needed to use this technology, the vast majority of Canadians are already fully online. However, there are already a number of cashless payment methods available to residents and a CBDC would likely make no difference.
“The typical consumer has access to cash, bank accounts, and debit and credit cards and does not face meaningful barriers to accessing financial services or payment methods,” the report reads.
Various payments methods already available to Canadians | Source: Bank Of Canada
Furthermore, the report points out that other reasons include a preference for cash payments due to the anonymity it provides. As well as the ‘Technology averse,’ meaning consumers who do not trust technology and as such refuse to carry out payments online.
However, it highlights that both of these groups make up a smaller subset of the population. The 2021 Methods-of-Payment Survey referenced in the report shows less than 5% of the population is cash-only. While a Statistics Canada report revealed that 8% of the population is technology averse.
Central Bank Digital Currency Adoption Worldwide
Over the last few years, the central banks of multiple countries have moved to launch their own CBDCs. The Atlantic Council CBDC Tracker shows that 11 countries have already fully launched a Central Bank Digital Currency. This includes the Nigerian eNaira, China’s Digital Yuan, and Jamaica’s Jam-Dex, among others.
So far, China seems to be having the most success of the lot but this is mostly due to the numerous promotional programs to foster the digital yuan adoption. Meanwhile, the Central Bank of Nigeria reported that eNaira ownership fell below exceptions, sitting at 2.5 billion Naira (around $2.7 million at the current exchange rate) in 2022.
Nevertheless, countries continue to actively move toward digital currencies, with 21 countries currently in the Pilot stage, 32 in the development stage, and 45 in the research stage. Of the countries that have explored CBDCs, 16 programs are currently inactive with 2 (Senegal and Ecuador) canceled.
Crypto total market cap maintains the $1.13 trillion market | Source: Crypto Total Market Cap on Tradingview.com