The usefulness of a central bank digital currency in addressing unmet payment needs in a cashless environment has been called into question by a Bank of Canada discussion paper.
Canada's central bank has spent the last few years carrying out research into a digital loonie and what design features would be relevant to citizens with diverse payment needs and circumstances.Download the document now 468.1 kb (Chrome HTML Document)
But in a new paper, bank staffers note that most Canadians do not experience gaps in their access to a range of payment methods, and this would probably continue to be the case in a cashless environment.
Nearly all - 98% - of Canadian adults have a bank account, while 87% have a credit card and internet access is high.
The paper notes that this still leaves some people that could face difficulties making payments if merchants no longer generally accepted cash as a method of payment.
However, for a payment-oriented CBDC to successfully address this issue, it would have to see widespread adoption among the majority of people who would not need it. If these people did not take to a digital loonie, widespread merchant acceptance would also be unlikely.
Concludes the paper: "The minority of consumers with unmet payment needs will only be able to benefit from a CBDC if the majority of consumers experience material benefits and therefore drive its use."
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