of bank of canada We believe central bank digital currencies (CBDCs) can play a transformative role In strengthening financial inclusion.
A central bank digital currency (CBDC) is a digital form of a country’s currency that is issued and regulated by a country’s central bank. Unlike cryptocurrencies like Bitcoin or EthereumCBDCs are not decentralized and are typically backed by the full trust and confidence of governments.
A CBDC is designed to be a digital representation of a country’s currency in electronic form, similar to physical banknotes and coins. These are often built on blockchain or distributed ledger technology, which provides security and transparency.
One of the remarkable revelations from reportTitled “Redefining financial inclusion for the digital age: Implications for central bank digital currencies” is the decline in cash usage in Canada. There is also a noticeable preference for card and digital payments.
Traditional indicators such as bank accounts and access to the internet have often been the basis for measuring financial inclusion.
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However, the paper argues that these indicators may not capture the complex challenges faced by individuals, particularly in the areas of trust and financial literacy.
Discrimination faced by certain communities, particularly Indigenous and Black Canadians, at financial institutions can prevent them from accessing traditional financial services.
Digital inclusion, which ensures fair and secure access to digital technologies, is highlighted as a crucial element.
While Canada’s urban areas enjoy robust digital connectivity, this report highlights significant challenges facing remote areas, particularly Indigenous communities.
The potential introduction of CBDCs with offline digital payment solutions could be a game-changer for these sectors.
