That can be converted into a “loonie,” the colloquial term of the Canadian dollar, as cryptocurrencies grow in popularity, a new report by C.D. Howe Institute said.
Along with this story, I add my opinion on commentary where ever I feel I have something to say bringing value to the topic. Sources for this original article and another media are listed below.
“Canadian-dollar-linked stablecoins could become attractive to Canadians by making them convertible into cash issued by the Bank of Canada, and ensuring that cryptocurrency stablecoins are well designed and regulated from business conduct, competitive, operational, privacy and prudential perspectives,” wrote Mark Zelmer and Jeremy Kronick, the authors of the report.
eyescoops – As of now there are over 13 000 cryptocurrency coins and tokens combined. How many more coins and tokens can the market and people handle? Cryptocurrency is already confusing as anything can be already. For the most part, people not into cryptocurrency have no idea what cryptocurrencies are never mind the projects behind them. This brings the question, do we need another digital currency.
Everyday brings new cryptocurrencies to life and already, Miami, New York have their own digital currency
A stablecoin is a type of cryptocurrency whose value is tied to an outside asset, such as the U.S. dollar or gold, to stabilize the price. Recently nominated vice-chair of the U.S. Federal Reserve, Lael Brainard, has voiced her support for the potential advantages of a central bank-issued digital currency (CBDC).
Such a feat by the Bank of Canada will require any potential stablecoins to be well designed and regulated to make them attractive to Canadians, Zelmer and Kronick wrote. The digital currency should also be issued in token form, with decentralized technology for settling transactions, allowing Canadians to retain most of the benefits of a paper currency, the authors added.
eyescoops – It’s odd to me that anyone can decide to create a token. I mean really, anyone, without some "Body" saying, yes you meat the criteria for a legitimate organization with legitimate projects and beneficial for personal or business use.
“Our preference is for an ‘indirect CBDC,’ one that is allowed to pass over the balance sheet of payment providers, mimicking cash/banknotes on the Bank of Canada’s balance sheet today,” the duo said.
The authors also highlighted that such adoption may incentivize private sectors to introduce Canadian-dollar linked stablecoins by enabling convertibility to cash to take place digitally, without relying on physical bank notes.
On Feb. 25, 2022 Canadian bank VersaBank said it plans to launch a stablecoin “VCAD” which will be pegged to the Canadian dollar on a 1:1 ratio basis.
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The Bank of Canada adopting a digital currency that is convertible into Canadian dollars could usher in a new chapter in how Canadians pay for their goods and services. According to the report, however, this move can only be successful if there is a mass adoption by the consumers and there are infrastructures to support such use of digital currencies.
eyescoops – even though crypto is becoming more known, is still hard for the average person, until you know who to fund a wallet for example, to use crypto never mind purchase goods and services. Coins and token creators need to make wallets, funding more easily accessible for the average person if adoption into main stream currency is going to happen.
“Canadians are more likely to favor those stablecoins if governments facilitate innovation in the payments world so that Canadians can benefit from ongoing advances in payments systems and crypto-technology, and the purchasing power of the Canadian dollar is maintained by keeping inflation low,” the authors concluded.
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