Canada CBDC Tracker

Canada is currently in the research phase of its central bank digital currency (CBDC) development, according to reports by the Bank of Canada. In 2024, the Bank of Canada added a note to its website saying it is “scaling down its work on a retail central bank digital currency and shifting its focus to broader payments system research and policy development.”

Current human rights and civil liberties concerns in Canada include the weaponization of the financial system to combat a protest. In early 2022, Prime Minister Justin Trudeau invoked the Emergencies Act to freeze more than 200 bank accounts of protesters. If Canada had a CBDC available at the time—especially on the individual or retail level—the process of freezing accounts would have been expedited and likely on a much grander scale.

CBDC History and Development

In 2017, the Bank of Canada kicked off its research into CBDCs with a staff discussion paper titled, “Central Bank Digital Currency: Motivations and Implications.” The paper notes that the “emergence of digital currencies such as Bitcoin” has led many people to ask, “whether central banks themselves should issue digital currency that could be used by the general public.” The paper therefore argues there are eight possible motivations to issuing a retail CBDC: ensuring public access to central bank money, preserving seigniorage revenue, reducing the lower bound on interest rates, supporting unconventional monetary policy, reducing aggregate risk, improving financial stability, promoting financial inclusion, and inhibiting criminal activity. Notably, however, the paper said preserving seigniorage, reducing the lower bound, promoting financial inclusion, and inhibiting criminal activity were not compelling reasons to issue a CBDC.

In 2018, the Bank of Canada published two papers by its staff: “Central Bank Digital Currency and Monetary Policy” and “Should the Central Bank Issue E-money?” The first paper found that a “CBDC provides more flexibility for the central bank to conduct monetary policy… because the central bank can monitor agents’ portfolios of CBDC and can cross-subsidize between different types of agents[—actions] not possible if agents use cash.” The second paper explored the different ways a CBDC might be offered, and ultimately concluded that innovations with distributed ledger technology do not justify the introduction of a CBDC.

In June 2020, the Bank of Canada published a note on “Designing a CBDC for Universal Access.” With cash as the benchman, researchers looked at how a CBDC might be designed for maximum accessibility. In this context, accessibility means that use should not depend on ID requirements, accounts, electricity, online connections, or other restrictions. The researchers proposed offering a “universal access device” that would basically operate like a credit or debit card. The card would need to be paired with a smart phone or computer to check the balance.

In October 2020, the Bank of Canada published a paper about the security and convenience of a CBDC. According to the paper, offering an anonymous token based CBDC would pose security risks. Those risks are described as a money laundering risk and a risk that consumers might lose their money. The paper therefore recommends restricting how much money people are allowed to have and require people to store their CBDC with an intermediary like a bank.

In 2023, the Bank of Canada set up a webpage that describes CBDCs as something that “would be a digital form of the cash in your wallet.” However, it fails to mention that CBDCs, unlike cash, leave a digital trail and often require identifying information. To its credit, the Bank of Canada does openly acknowledge that “We don’t see a need for a digital dollar right now.” Therefore, the Bank of Canada says it is only conducting research in case a need for CBDCs arises in the future.

At the same time, the Bank of Canada requested public comments from May 8 to June 19 to better understand the public’s perception of CBDCs and possible application. Over 85,000 Canadians responded to the request.

After reviewing the responses from the public, the Bank of Canada published a report summarizing the feedback. The bank found that Canadians were deeply concerned about a CBDC eroding financial privacy and leading to the end of cash. According to the report, “Respondents to the public questionnaire overwhelmingly valued the privacy and anonymity that bank notes provide and believed the Bank should not collect or have access to Canadians’ personal and spending information.”

In 2024, the Bank of Canada updated its webpage on CBDCs saying it is “scaling down its work on a retail central bank digital currency and shifting its focus to broader payments system research and policy development.” It further noted that it would “continue to monitor global retail CBDC developments and publish some related research, but the focus will be on preparing for the evolution of payments both in Canada and around the world, through policy research and analysis.”

Human Rights and Civil Liberties Concerns

Canada earned a 98 out of 100 in Freedom House’s 2023 Freedom in the World report. Although there are not many concerns within Canada, it is worth flagging how the Canadian government recently used the financial system to stop protests in 2022. Issuing a CBDC could worsen events like these. Most notable among Trudeau’s responses was the decision to freeze the bank accounts of protestors and expand the reach of anti-money laundering (AML) laws.

In early 2022, Prime Minister Justin Trudeau resorted to invoking the Emergencies Act for the first time in Canadian history to try to control the protests over COVID-19 restrictions. In just one week, more than 200 bank accounts were frozen in an effort to crack down on the protests. Ottawa’s police chief, Steve Bell, said, “If you are involved in this protest, we will actively look to identify you and follow up with financial sanctions and criminal charges. This investigation will go on for months to come.” If Canada had a CBDC available at the time—especially on the individual or retail level—the process of freezing accounts would have been expedited and likely on a much grander scale.

For additional information on concerns regarding violations of human rights and civil liberties, see the following reports by Amnesty International, Financial Tyranny Index, Freedom House, Human Rights Watch, Privacy International, and the U.S. Department of State. For additional information on concerns regarding the risks of CBDCs, see the following webpage and report by the Cato Institute: The Risks of CBDCs and Central Bank Digital Currency: Assessing the Risks and Dispelling the Myths.

For additional information regarding metrics, the methodology page explains each of the data points and provides their respective sources.