Internal government documents show Finance Department officials believe there could be sweeping implications for the economy if the Bank of Canada ever issued its own cryptocurrency.

The Bank of Canada has spent years looking at whether to introduce a digital currency, but so far hasnB次元官网网址檛 seen an immediate need to issue one.

In one briefing note from last January, officials warned Finance Minister Chrystia Freeland that the issuance of a central bank digital currency would entail B次元官网网址渨ide-reaching implications for the economy, the financial systemB次元官网网址� and the Bank of CanadaB次元官网网址檚 operations.

The documents also show the central bank held a series of meetings with federal officials over the course of 2020 to gauge the implications of a B次元官网网址渄igital loonieB次元官网网址� on departments and agencies.

Large swaths of the documents obtained by The Canadian Press under the access-to-information law have been blacked out because the department says they contain sensitive government information.

But what remains suggest some federal concerns about a central bank digital currency, with departments wanting to provide more input before a decision is made.

The Bank of Canada has upped the pace of its work on a digital currency, mirroring efforts by counterparts in other countries as the COVID-19 pandemic accelerates the transition to a digital economy.

The bank only plans to issue a digital currency if the use of physical bills for transactions plummets and one or more private cryptocurrencies, such as Bitcoin, become widely used in Canada.

The government and central bank have paid more attention to planned stablecoins whose value is less volatile, as the name implies, and are backed by cash and government securities.

The use in Canada of private cryptocurrencies tied to the American dollar would strain the Bank of CanadaB次元官网网址檚 ability to manage monetary policy for the benefit of the country, said Jeremy Kronick, associate director of research at the C.D. Howe Institute.

He said the bank needs to incentivize private cryptocurrencies to use the Canadian dollar as a backing.

B次元官网网址淭he government could quash this thing in a second. The government could just say, B次元官网网址榝orget it, you canB次元官网网址檛 transact in Canada,B次元官网网址橞次元官网网址� said Kronick, who recently co-authored a paper about the merits of a Bank of Canada digital currency.

B次元官网网址淚 donB次元官网网址檛 think they want to because there are benefits to the private cryptos that people like, but we want to also maintain that public good function. To do that, I think the (central bank digital currency) is the way to go.B次元官网网址�

Research by the central bank suggests the probability of people using Bitcoin is tied to its prevalence B次元官网网址� the more people who adopt it, the more likely others will follow suit B次元官网网址� as well as how optimistic users feel about BitcoinB次元官网网址檚 future.

The paper published in November noted that Bitcoin adoption in Canada remains low at around five per cent. The authors suggest young Canadians may be more likely to use Bitcoin because it is easier for them to purchase the digital currency than to open a formal bank account.

The Bank of Canada doesnB次元官网网址檛 have the legislative authority from Parliament to offer a digital currency, only to design, issue and distribute the bills stuffed inside wallets and handed over a counter.

The Finance Department has looked at legislation linked to a central bank digital currency of CBDC, although one March email noted that no other countries had B次元官网网址渄eliberately amended legislationB次元官网网址� to allow one.

The email noted that even in Sweden, B次元官网网址渨idely considered to be at the forefront of the movement towards CBDC among advanced economies,B次元官网网址� the government is expecting a report late next year on whether the central bank should have the power to issue a digital currency.

How fast Canadian officials move is likely to depend on how quickly major stablecoins roll out, Kronick said. He pointed to FacebookB次元官网网址檚 planned stablecoin in particular because it would be easily adopted by the social media giantB次元官网网址檚 users.

B次元官网网址淚 would like them to get ahead of it, but governments are notoriously slower-moving until they have to,B次元官网网址� Kronick said.

B次元官网网址擩ordan Press, The Canadian Press