Senior Bank of Canada officials disagreed with claims that bitcoin or any other cryptocurrency could replace the Canadian dollar in the face of rising inflation.
During an appearance before the House of Commons Finance Committee, Liberal MP Ivan Baker asked Bank of Canada Governor Tiff MacLeod and Senior Deputy Governor Carolyn Rogers whether the use of cryptocurrency could be an effective strategy against inflation.
I think if Canadians want a stable source of payments and a stable source of value, then cryptocurrencies don’t quite meet that demand,” Rogers replied.
We don’t see cryptocurrencies as a way for Canadians to avoid inflation or as a stable source of value.
Canada’s inflation rate soared to a 31-year high of 6.7 per cent in March, with Statistics Canada reporting that prices in all eight categories of the country’s economy it tracks, from food and energy to housing and transportation costs, are rising.
Earlier, Conservative Party leadership candidate Pierre Poilevre said he wanted Canada to be the “blockchain capital of the world” and would be happy to “give people back control of their money,” which would require maintaining the legal status of cryptocurrencies.
Last month, Poulièvre published a video in which he buys shawarma for bitcoin using the Lightning Network at a London restaurant in Ontario. In doing so, he highlighted the importance of new technologies and support for local entrepreneurs.
Despite the “promising benefits of innovation in the financial sector,” McLeom said that “we certainly expect the Canadian dollar to remain at the heart of the Canadian financial system.”
The Bank of Canada is currently working on its own central bank digital currency (CBDC), and the Massachusetts Institute of Technology joined the regulator’s research last month.
CBDC is a digital form of the country’s fiat currency. Unlike decentralized cryptocurrencies, CBDC is mostly controlled by central banks and the federal government, so it is not surprising that many politicians argue that CBDC would be a better option for payments than cryptocurrency.
However, the decision as to whether a central bank will adopt its own digital currency will ultimately be left to parliament.