Central bank digital currencies (CBDCs) have gained prominence around the world over the past couple of years and Canada is not left out. However, unlike some countries where these central bank digital currencies seem to be gaining traction, Canadians were not welcome. To that end, the Bank of Canada has conducted a new study to see what the barriers are when it comes to CBDC adoption in the country.
Roadblocks to CBDC Adoption
In the discussion paper entitled “Unmet needs for payment and central bank digital currency,” the Bank of Canada It highlights that a prominent factor that is a barrier to CBDC adoption in the country is that Canadians do not need to.
Unlike developing and underdeveloped countries where the main pain points lie in the lack of internet access and the devices needed to use this technology, the vast majority of Canadians are already fully connected to the internet. However, there are already a number of non-cash payment methods available to residents and it is likely that CBDC will not make any difference.
The report reads: “The average consumer has access to cash, bank accounts, debit and credit cards and does not face meaningful barriers to accessing financial services or payment methods.”
Various payments methods already available to Canadians | Source: Bank Of Canada
Moreover, the report states that other reasons include the preference for cash payments due to the anonymity it provides. Plus “technology aversion,” which means consumers who don’t trust technology and therefore refuse to make online payments.
However, it highlights that both groups constitute a smaller subset of the population. The Payment Methods Survey 2021 cited in the report shows that less than 5% of the population is cash only. While the Statistics Canada report revealed that 8% of the population hates technology.
Adoption of central bank digital currency worldwide
Over the past few years, central banks in several countries have moved to launch their own central bank digital currencies. the Atlantic Council CBDC tracker It shows that 11 countries have already fully launched a central bank digital currency. This includes Nigeria’s eNaira, China’s Digital Yuan, Jamaica’s Jam-Dex, among others.
So far, China seems to be having the most success but this is mostly due to the many promotional programs to promote the adoption of the digital yuan. Meanwhile, the Central Bank of Nigeria reported that eNaira holdings fell below the exclusions, reaching 2.5 billion naira (about $2.7 million at the current exchange rate) in 2022.
However, countries continue to actively move towards digital currencies, with 21 countries currently in the experimental stage, 32 countries in the development stage, and 45 countries in the research stage. Of the countries that have explored CBDCs, 16 are currently inactive programs with two canceled programs (Senegal and Ecuador).
Crypto total market cap maintains the $1.13 trillion market | Source: Crypto Total Market Cap on Tradingview.com