The Bank of Canada is keeping a close eye on the risks posed by new forms of electronic money, given that the Bank’s job is to issue currency, promote financial stability and oversee Canada’s payment systems, Senior Deputy Governor Carolyn Wilkins told a group of university students last week.
E-money is electronically-stored value that is not linked to a bank account. The Senior Deputy Governor talked about two types of e-money: the first is denominated in a national currency and is a claim on the issuer, such as PayPal balances or stored-value cards; the second is cryptocurrency such as Bitcoin, which is not denominated in a national currency.
E-money and the technology that enables it are circumventing old models of payments and fast creating new efficiencies and new risks. “People who use these technologies need to be aware of the risk of putting their trust in an e-money scheme that is lightly regulated with limited or no user protection,” Ms. Wilkins told students at Wilfrid Laurier University.
Bank of Canada Senior Deputy Governor Carolyn Wilkins. (CBC photo.)
So far, Canadians still prefer debit cards and cash over e-money. “E-money is not big enough to pose material risk to financial stability in Canada at this time. That said, money and payments technology is progressing in leaps and bounds, and so the Bank of Canada is watching developments closely,” the senior deputy governor said.
A more detailed story will be published in this week’s issue of Canadian Coin News.