The Bank of Canada has made no secret of its efforts to explore a Central Bank Digital Currency (CBDC), a “digital dollar” issued and controlled by the central bank. The Bank of Canada is not alone. To date, 134 countries and currency unions have explored a CBDC, and 66 countries are already in advanced stages of implementation.
In 2023, cash accounted for a mere 11 percent of total payments made by Canadians. Consumers increasingly tap their credit and debit cards at checkouts, send e-transfers, or use online banking to pay bills, make investments, and donate to charities. For many Canadians, metal coins function less like a currency and more like a locker or shopping cart token; paper bills are for birthday cards, not for “serious” transactions. New legislation in Quebec empowers law enforcement to presume that cash sums of $2,000 or more are the proceeds of unlawful activity.
While most consumers seem to appreciate the convenience of an increasingly digital economy, a CBDC is a radical change from using credit cards and online banking apps. A CBDC would likely lead to a cashless economy, in which all financial transactions can be monitored and controlled by government. A cashless economy would create severe hardship for people who are homeless, technologically illiterate, or without ready access to the internet.
For Canadians who look after their finances electronically, cash remains essential to protect their rights and freedoms, including their privacy, security, and autonomy. In a cashless economy, all transactions are digital, subject to surveillance, and ultimately subject to government control. CBDC opens the door for governments to reward or penalize Canadians for their personal choices on how to live, where to go, and what to do with their own money.
Governments can use CBDC to restrict when, where, and what people are allowed to buy, leading to a level of control resembling communist China’s notorious “social credit” system. China uses “social credit” to reward citizens who support the Communist Party and its rules and policies. Those who criticize the Party can find themselves unable to board a train, plane, or subway, denied a bank loan, or prevented from enrolling their children in the best schools and universities.
Cash means privacy and confidentiality.
Hellbound and Down 