Central Bank Crypto Could Bring Economic Gains: Bank of Canada Paper

Central Bank Crypto Could Bring Economic Gains: Bank of Canada Paper

According to a central bank researcher, the cryptocurrency issued by the central bank could potentially bring economic well-being to Canada and the US.

In a work paper published on Thursday, S. Mohammed R. of Bank of Canada Davoodalhosseini said that starting the central bank digital currency (CBDC) could increase Canada consumption by 0.64 percent and increase by 1.6 percent for the America, compared to their respective economies if only cash is used.”

 

At the moment, Davoodalhosseini says that the current issue of CBDC issuance is an important question for “many” central banks, whether the digital form of cash and Fiat currency should be co-existent, and if so, how to maintain an “optimal” monetary policy.

Based on elaborate modeling and mathematical calculations, the researcher argues within the paper that a country’s economic welfare-  at least of for Canada and the U.S. –can be comfortable by substituting money with a CBDC, provided implementation isn’t extra pricey.

The paper more states that, by introducing a CBDC, central banks have the next level of flexibility in adjusting current financial policy.

The paper’s quantitative approach follows a previous December 2017 effort by different researchers from Canada’s  central bank to determine the worth of giving CBDC over money- work that took a more qualitative look at the profit and loss.

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