Canada’s Central Bank Rolls Out Plan For A Central Bank Digital Currency (CBDC)

Written By Wyatt Claypool, Posted on October 24, 2022

The Bank of Canada recently released a report comparing different operating structures for a Canadian Central Bank Digital Currency (CBDC), should one be established. The report titled “Archetypes for a retail CBDC” goes into detail about what the Central Bank views as the goals of the CBDC and how it needs to be set up in order to achieve those goals.

(The report is specifically referring to a “retain CBDC” but that basically just means it is a CBDC not meant just as a financial tool for large national banks to move large sums of money.)

Of course, the Central Bank report when it’s discussing the archetypes of a CBDC talks about stuff like the security of the CBDC system, and the inability for it to be altered by outside forces, which are all basic requirements for any digital system. 

Image of a Chinese CBDC application that the Chinese Communist Party has been rolling out in some provinces of China.

What is most glaring about the report is just how open the Central Bank is about valuing a CBDC for the ability to centralize power over the currency, and economy, around the government. Although the report still uses soft-sounding language to make the idea of effectively making the government the gatekeeper of every Canadian money not sound like a massive overstepping of power. 

Under one section titled “Centralized” the report reads that:

The distinguishing feature of the centralized archetype is that the total system state is within the trust zone of, and controlled by, one entity. This entity would have the power to approve and apply each update or deny it. Users connecting to the system do not hold any state, only credentials that authorize access. An operation, such as a transaction or issuance, could be fully recorded as a change to information within the zone.

It probably doesn’t need to be stated how creepy and authoritarian it is for Canada’s Central Bank to say with no sense of irony that users “do not hold any state” in the CBDC system and are only merely allowed access to the system. It means that effectively in a CBDC system Canadians’ money would first be the Central Banks which Canadians merely have permission to access. 

Remember, a CBDC would not just be another option in the economy for spending out of your debit account or using cash, it would replace both your normal bank’s debit account if the CBDC saturated the market, and effectively make Canada a cashless-society.

Just a bit further down in the “Centralized” section, the report also says that the CBDC would ideally be a  “total state controlled by one party” and even call the portion of the system users can access the “trust zone” which just sounds like the Central Bank patronizing to users as if they are their parents giving them an allowance for not rocking the boat too much. 

(Image from the Bank of Canada)

One archetype  the Central Bank is putting forward for their CBDC that is also less immediately concerning but is important to note is the version they want to be “leaderless.”

This means in practice that the CBDC has no singular person managing it during its normal operations unless the head of the Central Bank makes some sort of executive decision. The issue with this is that the responsibility for any manipulation or freeze on an individual Canadian’s money cannot be assigned to anyone specifically, and thus, in theory,  allowing bureaucrats anonymity to act in a political fashion behind the scenes.  

(Image from the Bank of Canada)

The Central Bank’s report on archetypes also lists some other mixed half-centralized half-decentralized CBDC systems, but in practice, they are far more likely to push for either the centralized version or centralized and “leaderless” versions seeing as the other options are overly-complicated and bulky. 

Overall, Canadians should not just see reports the Central Bank puts out on CBDCs and see them just as some nebulous theorizing about how digital currency would work in a hypothetical world. The Central Bank is specifically investigating the implementation of a CBDC because Prime Minister Justin Trudeau’s Liberal government earmarked $17.7 million in the 2022-2023 budget to research a Central Bank Digital Currency for Canada. 

This is a real authoritarian takeover of Canada’s monetary system that the Liberals are very interested in pursuing, and thankfully the Conservative Party under Pierre Poilievre’s leadership will oppose (according to an interview Poilievre did with The National Telegraph).

Wyatt Claypool

Wyatt is a student at Mount Royal University, where he is the president of its Campus Conservative club. In his writing, he focuses on covering provincial and federal politics, firearms regulation, and the energy sector. Wyatt has also previously written for The Post Millennial.

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