The Impact of Digital Canadian Dollar Anonymity on Bank Lending: Bank of Canada Analysis
Date: 2024-04-04 Author: Gabriel Deangelo Categories: IN WORLD
Research context
The Bank of Canada has published a report analyzing the potential impact of the anonymity level of the digital Canadian dollar (CBDC) on its public acceptance and on bank lending. Researchers have noted the importance of this aspect, especially in terms of the ability of commercial banks to provide credit.
The report identifies two main groups of entrepreneurs: large and small. The former's preferences lean towards the use of less anonymous CBDCs, while the latter prefer cash and may be interested in more anonymous CBDCs.
Risks and trade-offs for banks
The report's authors suggest that commercial banks will seek to reduce the level of anonymity of the digital dollar in order to reduce risks when issuing loans. However, this can create problems for small entrepreneurs who prefer more anonymous means of exchange.
Prospects for CBDC in Canada
Although the Bank of Canada in February refuted concerns about a possible exodus of customers from commercial banks due to the introduction of CBDC, polls show that the public is not yet ready for such a step.
The anonymity of a CBDC plays a key role in its acceptance by society and influences bank lending. Therefore, it is important to find a balance between the level of anonymity and the needs of banks and entrepreneurs.
