Bank Of Canada released a paper suggested that a Canadian CBDC could provide a number of innovations, including the elimination of transaction fees from debit and credit cards. The study noted that the country could benefit from its own CBDC.
The study laid out two arguments that might result in the bank issuing CBDC. One would be if citizens were no longer widely using cash within the country for reasons that were left unspecified. The other could be if a digital currency, public or private, were to become so widely adopted as to threaten the sovereignty of Canada’s existing central currency.
The document acknowledged a number of potential benefits inherent to the adoption of a CBDC. When compared to payment options like credit or debit cards, a CBDC would also not necessarily have the same type of transaction fees for retailers: “A CBDC could be a simpler competition policy tool because it would provide an alternative low-cost payment instrument for customers and merchants. This would help bring down the interchange fees charged by the established networks.”
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The Bank of Canada paper argues that CBDCs endowed with programmability through smart contracts will engender vibrant innovation and competition in digital services. There could be many benefits to creating a CBDC for Canada. The study explained:” In general, we argue that a CBDC might be beneficial and probably necessary to ensure a competitive and vibrant digital economy.”
