Representatives from the Bank of Canada claim the institution remains unconcerned by the advent of bitcoin and digital currencies in general.
Speaking at a session of the Senate banking committee, central bankers said it is simply too early to predict whether digital currencies will gain traction from mainstream users.
Bank of Canada governor Stephen Poloz added that digital currencies are still in their infancy and have not progressed to the point where he would call them money, reports Global News.
“We’ve got a ways to go before we need to be thinking about policy implications,” he said. However, Poloz said the bank is tracking developments in the field.
Cash is remarkably durable
Tiff Macklem, the bank’s outgoing Senior Deputy Governor, told the committee that he’s been with the bank since 1984 and had heard many predictions involving the imminent demise of cash, but none of them panned out.
Macklem pointed out that the amount of cash in circulation is still going up:
“Cash has been remarkably durable, even with the introduction of credit cards and debit cards and tap-and-go cards. If you look at the growth of cash in the economy, it’s grown roughly in line with the growth of nominal income.”
He said that bitcoin is simply not in a position to threaten the official money supply and that it may never be. Therefore, any potential implications are purely speculative at this point.
Not impossible, but very improbable
Macklem pointed out that if digital currencies catch on in a big way, they could have an effect on the bank’s ability to regulate the money supply, but at this moment it seems “pretty far off”.
However, although he does not expect digital currencies to have a significant impact on Canada’s monetary policy, Macklem admits that they have a few beneficial qualities for payments and remittances.
Low transaction fees make them appealing, too, but security issues remain a concern.
Canada’s position on digital currencies has been neutral so far. Earlier this year the country’s finance minister Jim Flaherty announced plans to regulate digital currencies in order to prevent their use for illicit activities such as money laundering.
The country’s attitude towards digital currencies is somewhat more liberal than in the US and regulators have treaded carefully, refusing to stifle innovation in the field.
In addition, Canada’s Revenue Agency recently issued new guidance on the tax implications of using digital currencies. The document outlined the official position on digital currencies and clarified a few issues raised by bitcoin businesses.