Bank of Canada looking into issuing digital currency

The Bank of Canada's senior deputy governor, Carolyn Wilkins, revealed that the bank is researching the merits of issuing digital currency itself at Wilfrid Laurier University on Thursday.

Bank keeping a 'close eye' on risks posed by digital currencies

Wilkins says the Bank of Canada and the federal government are both looking to modernize their oversight frameworks for payments to address the rise and popularity of digital currencies such as bitcoin. (Matthew Kang/CBC)

The Bank of Canada is looking into possibly issuing its own digital currency like bitcoin, according to a senior official in the bank. 

Carolyn Wilkins, the bank's senior deputy governor, made the revelation at Wilfrid Laurier University in Waterloo, Ont. on Thursday, though she cautioned the bank is keeping a close eye on the benefits and drawbacks of digital currency. 

Wilkins says bitcoin and other digital currencies have a long way to go before they can truly circumvent central banks, since the daily number of transactions is still relatively low compared to debit and credit cards.

Although Wilkins didn't elaborate on how or when the Bank of Canada would ever issue its own digital currency, she didn't shy away from addressing a scenario where e-money could overtake conventional money.

"In the very unlikely situation in which cryptocurrencies were used broadly, a significant proportion of economic transactions would not be denominated in Canadian dollars," said Wilkins in her speech. "This would reduce the bank's ability to influence macroeconomic activity through Canadian interest rates."

"Let me be clear, we are nowhere near this point today," she added.

Wilkins also reiterated the bank's view of digital currency as an investment product rather than money, and that capital gains made on the sale of digital currency should be reported to the Canada Revenue Agency.