A Bank of Canada study explores how a Central Bank Digital Currency (CBDC) could address inclusion issues in Canada’s financial landscape, shedding light on the challenges and opportunities for digital payments.
A recent study by the Bank of Canada, titled “Redefining Financial Inclusion for a Digital Age: Implications for a Central Bank Digital Currency,” delves into the role a Central Bank Digital Currency (CBDC) could play in improving financial inclusion. While Canada boasts a high level of financial inclusion, with 98% of adults having access to bank accounts, challenges persist for underbanked Canadians who rely on higher-fee alternative providers.
Interestingly, the study highlights the decline in cash usage, a key element of financial inclusion, from 53% of transactions in 2009 to under 21% in 2021. Despite this shift, cash is still widely accepted. The research suggests that addressing these challenges is essential for CBDC design.
The study emphasizes that CBDCs should consider factors beyond traditional financial inclusion, such as digital inclusion and accessibility. To achieve universal accessibility, CBDCs must adapt to evolving technical landscapes, a departure from the era when banknotes sufficed. The findings underscore the need for further research to ensure that digital payments benefit the broadest population.
