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If the world’s second-largest economy adopts a state-backed electronic coin, then it will be difficult for the rest of the world to argue that it can’t — or shouldn’t — be done.
“Online shopping has got a really big boost from this whole period,” Lane said on Nov. 24, when we met via videoconference for a second conversation about CBDCs. “We’ve also seen more automation — at least, incentives to automate some processes and so on. That may also move us closer to a time when we may need to consider having a digital version of cash.”
In February, the Bank of Canada concluded after a long research period that a digital form of official money was unnecessary. It did, however, set out the conditions that would cause it to change its mind: competition from a popular digital currency backed by a company or another government, or a dramatic shift in consumer behaviour.
Back then, the former seemed like the bigger threat, since Facebook Inc. had been pushing hard to get regulatory clearance for Libra, a “stable coin” that would facilitate transactions across its vast social network. Facebook has since scaled back its ambitions in the face of significant political headwinds, but, as it did so, the COVID-19 lockdowns pushed commerce online in a way that no one saw coming.
“You’ve got private companies that are obviously going to be looking for opportunities to take advantage of the changes in consumer behaviour,” Lane said. “If the public actually has a desire to use something that has the attributes of cash, but that can be used electronically, then that could also be a case that would lead us to consider this much more seriously.”
