The Bank of Canada has no plans to issue its own digital currency, but says this could change if cash usage drops off significantly or private options such as the Facebook-backed Libra gain widespread adoption.
The Bank of Canada has spent several years working with the country's commercial lenders to explore the creation of a DLT-based central bank digital currency (CBDC).
However, it has now decided that there is no "compelling case to issue a CBDC at this time," says deputy governor Timothy Lane in a speech.
Canada is already modernising its payments infrastructure through the construction of a fast, always-on system called Real-time-Rail, while the country is also exploring open banking and working with international allies on improving cross-border payments.
Says Lane: "Canadians will continue to be well-served by the existing payment ecosystem, provided it is modernised and remains fit for purpose."
However, Lane does not rule out a change of heart, noting that "the world can change very quickly".
For instance, if cash could no longer be used for a big enough range of transactions, cutting some people out of economic activity and reducing privacy, a CBDC could become an option.
Equally, if private digital currency gained widespread adoption, the central bank may be forced to think again.
"This could be one dominant digital currency created by a big tech company — a monopoly that would erode competition and privacy and pose an unacceptable challenge to Canadian monetary sovereignty.
"We could also imagine not one, but several, private digital currencies emerging. In this case, consumers and merchants would face an assortment of different methods of payment—reminiscent of a time before the Bank of Canada was created, when the country had multiple issuers of bank notes.
"In both scenarios, there would be an argument for the Bank of Canada to step in. The Bank would do this as a trusted public institution, creating an official digital currency that is designed with the interest of the public as its top priority, with no commercial motive," says Lane.