A Bank of Canada announcement from March 16 outlined a year-long research project on a CBDC, and stated that the project would work in collaboration with the Centre for Economic and Business Research.
MIT Media Lab’s Digital Currency Initiative team and the bank will work closely together to explore distributed ledger technology and how it is capable of influencing the potential design of a CBDC. These efforts will build on the existing work carried out by the research lab. Additionally, according to the announcement, the Bank of Canada is undertaking more comprehensive research and development related to digital currencies and the ever-evolving world of fintech.
According to the central bank, it will provide a final report on the findings and outcomes at the end of the project. However, the announcement also stated that:
“No decision has been made on whether to introduce a CBDC in Canada.”
The bank revealed in February that it was studying potential system designs and business models for creating a digital currency as part of its research. This new currency would serve all of the features of a traditional banknote such as being widely accessible, secure, and pegged to the Canadian dollar (CAD). In its statement issued at the time, the bank confirmed there were no plans to issue a CBDC, stating that The proposed designs are therefore not intended to be adopted by the Bank. Rather, the Bank will use these reports to inform its thinking and advance public conversation on a central bank digital currency design.
A project dubbed “Project Hamilton” tested two hypothetical CBDC models, which include distributed ledger technology (DLT) and parallel processing of transactions on multiple computers rather than relying on a single ordering server to prevent double-transactions.
In terms of the United States, outlined in President Joe Biden’s Executive Order on Ensuring Responsible Development of Digital Assets, the administration intends to place the greatest amount of emphasis on research and development efforts into the potential design and deployment options of a U.S.-based CBDC.
Furthermore, the Executive order directs the Secretary of the Treasury and other relevant officials to prepare research reports for CBDCs that will be submitted to the President, while the Attorney General is assigned the task of taking an estimate of any legislative changes needed to establish a CBDC and developing those modifications in full promptly afterward.
It was reported earlier in the month that both the Philippines and Brazil were interested in CBDC research.
