In recent years, many countries have taken significant steps towards researching and developing CBDCs in the face of digitalization in payment systems and the rise of cryptocurrencies.

However, the Bank of Canada has taken a more cautious approach to the necessity of a digital currency and has shifted its research efforts in a different direction. This development coincides with the strong opposition to CBDCs, especially by Canadian Conservative Party Leader Pierre Poilievre.

The Bank of Canada’s work on the digital currency idea started about seven years ago. This process has accelerated especially with the increase in digital payment methods and the decrease in the use of cash.

However, by 2023, the bank put this project on the backburner and focused on analyzing trends in payment systems in Canada and around the world.

A spokesperson for the Bank of Canada told CBC News that while it is conducting “significant research” into the effects of a retail central bank digital currency (CBDC), there has been no progress in developing the “Loonie”, also known as the digital Canadian dollar. he emphasized.

While interest in digital currencies continues to increase around the world, it is noteworthy that Canada has put this project on the backburner. According to data published by the think tank Atlantic Council, 134 countries, covering 98% of the world economy, are exploring central bank digital currencies.

44 of them are testing CBDCs in the pilot phase. Additionally, more than 65 countries such as India, Australia and Brazil have reached advanced stages in the CBDC development process. All G20 countries are exploring their own digital currencies, with 19 at an advanced stage in this process.

Evaluations on the potential risks and rewards of digital currencies may lie behind Canada’s cautious approach to this project.

While the digitalization of payment systems and the development of digital currencies by central banks offer many advantages, they also bring various economic and technological risks.

In particular, issues such as cybersecurity threats, user privacy and financial stability are some of the main challenges that central banks face in the process of digital currency development.

Opposition to digital currencies in Canada also attracts attention. In August 2023, Canadian Conservative Party Leader Pierre Poilievre clearly stated his opposition to CBDCs. Poilievre vowed to protect the use of cash and stand against the government’s push for economic digitalisation.

He also supported Canadian House of Commons member Ted Falk’s Bill C-400, which aims to ban the implementation of a digital currency. This attitude of Poilievre stands out as a political factor that strengthens the Bank of Canada’s reluctance to develop a digital currency.

While Canada’s cautious approach to digital currencies may seem to deviate from global trends, it demonstrates the country’s sensitivity to maintaining its economic and financial stability.

In particular, the opposing stances of political figures such as Poilievre and the potential risks posed by digital currencies may have led the Bank of Canada to decide to postpone this project.