Canada’s central bank just slammed the brakes on its long-awaited digital loonie. After almost five years of digging into the potential of a central bank digital currency (CBDC), the Bank of Canada decided to shelve the project. So yeah, the “digital loonie” is going nowhere—for now, at least.
What Happened to the Digital Loonie?
Back in 2019, the Bank of Canada kicked off research on whether they should create a CBDC. They were looking to protect monetary sovereignty and financial stability, especially as the use of physical cash started fading out across the country. By 2022, they even opened it up for public consultation, hoping to get a sense of what Canadians thought.
The central bank kept the research engine running, and by early 2024, they’d made a pretty solid case for a digital loonie. Economists said it could help modernize the Canadian economy, but a paper also warned it might cut into bank deposits by as much as 12%.
But here’s the twist: despite all that work and all the potential benefits, the central bank just decided to hit the pause button. They didn’t give a clear reason either, just confirmed to CBC that the plans were on ice.
Canadians Weren’t Exactly Lining Up for It
The public wasn’t sold on the digital loonie from the start. In fact, it seems most Canadians weren’t buying it. Polling from late 2023 showed that 80% of respondents were against the idea of a CBDC. That’s a huge chunk of people saying “nah” to the whole thing.
And it’s not just the average Canadian that was skeptical. Pierre Poilievre, leader of the Conservative Party and major player in Canadian politics, was one of the most vocal critics. He warned that a digital loonie could open the door to “politicized banking” and that privacy could take a hit. Instead of trusting a CBDC, Poilievre suggested Canadians park their wealth in Bitcoin, especially with inflation still creeping up in Canada.
G7 Nations Are Also Cooling on CBDCs
Canada’s not alone in pumping the brakes on a retail CBDC. The United Kingdom announced in January 2024 that it’s holding off until further studies are done. Meanwhile, Australia’s recent pivot switched the focus from a retail CBDC to a wholesale one instead. So it’s clear that major economies are having second thoughts about bringing digital currencies to your daily coffee runs.