Bank of Canada's digital currency idea could have 'unintended negative consequences,' says journalist
Zane Schwartz says there would need to be 'clear safeguards' on privacy for digital currency
Canada's central bank will have to answer a lot of questions about privacy concerns if it decides to develop its own digital currency, says tech reporter Zane Schwartz.
Schwartz, a reporter at the Canadian technology news website The Logic, recently acquired internal Bank of Canada documents through a Freedom of Information request that found that the central bank is considering creating a digital currency, which the bank said would allow it to compete with the "direct threat" of cryptocurrencies like bitcoin.
While it was already public knowledge that Canada is researching digital currencies, "the internal document shows that this was a strategic priority," Schwartz told The Current's interim host Laura Lynch.
Schwartz said the documents show the bank is interested in potentially developing a currency that would eventually replace cash.
And according to the documents, Schwartz said, a proprietary digital currency would also allow the Bank of Canada to collect more information on how Canadians are using their money, and potentially share that information with police or tax authorities.
This "could be good for them if, let's say, they're trying to stop illegal activity or terrorist financing, but may also have unintended negative consequences," he explained.
The Bank of Canada's deputy governor, Tim Lane, recently told a panel at the International Monetary Fund that "if you are transferring large amounts, then the law enforcement officials could have access with proper authorization."
But Schwartz said that the kind of authorization required for that access is currently undefined.
"You'd want to have clear safeguards," he said.
Currently, authorities require a warrant to acquire an individual's spending information through their bank. But Schwartz said it's unclear if that would be the case with a Canadian digital currency — or whether users would even know if their information had been accessed by government or police.
"It's entirely possible that a balance could be struck that Canadians would be happy with," Schwartz said.
"But right now all we have is the Bank of Canada saying [they would] like to be able to share information with police and tax authorities, but we don't really have any further details than that."
In an email statement, the Bank of Canada told The Current: "Any potential system would need the support of government and would have to comply with Canadian privacy laws. The public values privacy, and this is an important feature we would seek to maintain in designing a Canadian banking digital currency."
Written by Allie Jaynes. Segment produced by Peter Mitton and Danielle Carr.