Canada’s central bank is urging the establishment of a regulatory framework for stablecoins to modernize its payment system and keep pace with other nations advancing similar initiatives.
“Even if you’re on the right track, you’ll get run over if you sit there,” stated Ron Morrow, the executive director of payments, supervision and oversight at the Bank of Canada, during a speech on Thursday at the Chartered Professional Accountants conference in Ottawa, Canada, a transcript of which is available on the central bank’s website.
Morrow emphasized the need for federal and provincial regulators to develop a policy framework for stablecoins. “For stablecoins to be recognized as money, they must be as safe and stable as the balance in your bank account,” he noted, adding:
“Governments are moving to regulate stablecoins and other cryptocurrencies to ensure consumers can benefit from them while being safeguarded against credit and liquidity risks. Indeed, many regions worldwide already have, or will soon create, a regulatory framework for crypto assets.”
The remarks coincided with what many in the crypto sector are referring to as “stablecoin summer,” highlighting the revival stablecoins are experiencing after the passage of the GENIUS Act in the United States, which has facilitated widespread adoption of stablecoins.
Related: ASIC simplifies licensing rules for stablecoin distributors in Australia
Bank of Canada revises stance on central bank digital currency plans
In 2022, Canada’s central bank teamed up with the Massachusetts Institute of Technology (MIT) to explore the development of a central bank digital currency (CBDC).
However, in September 2024, the bank opted to halt its CBDC development efforts to prioritize other initiatives, including establishing a real-time payment system that would ensure instant fund transfers for users.
The bank conducted a survey among Canadians regarding their views on CBDCs and discovered that 42% had a positive perception of them, while 20% expressed dislike or even hatred towards the concept.
CBDCs remain a polarizing subject within the crypto community, with many stating that the technology contradicts the principles of open, permissionless finance. Critics also argue that CBDCs could pave the way for a surveillance state.
Magazine: Unstablecoins: Depegging, bank runs and other risks loom