Report: Bank of Canada not worried bitcoin will replace cash

Speaking with The Canadian Press, outgoing Bank of Canada second-in-command Tiff Macklem said that his organization isn’t worried about the impact of bitcoin on the banking sector. According to Macklem, bitcoin’s innovations and implications for monetary policy are speculative, and “far into the future.” Given the tiny global market cap, and immature ecosystem, Macklem says that today’s cryptocurrencies are no threat to the official, regulated money supply.

I started with the bank in 1984 … and through my entire career at the bank the demise of cash has been much predicted,” he noted. “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.”

Macklem appears to view cryptocurrencies as interesting experiments, useful for innovation but hardly capable of uprooting the entrenched international banking system. While the Canadian central bank is certainly following the development of virtual currencies, this is mostly to ensure that proper consumer protections are in place. That said, he also sees plenty of value behind the innovations of bitcoin and other virtual currencies.

There are certain applications of some sort of global currencies which could be quite helpful, for instance payments of remittances, which can be quite expensive.”

Macklem was willing to concede that if digital currency were to “catch on in a big way,” it could impact the central bank’s control and reduce its ability to regulate the money supply. He was quick to note that such a possibility seems “pretty far off.”