Will they or won't they? Central banks eye each other's digital currency moves

Canada doesn't want any "Surprises" regarding central bank digital currencies.

In a recent interview with Reuters, Bank of Canada Governor Tiff Macklem doubled down on the country's contingency-plan approach to CBDCs, stressing that he sees no urgent need to issue one right now.

The country has had a collaborative CBDC research project, Project Jasper, underway since 2017, which focused on wholesale applications for central bank digital money.

Aside from other central banks seizing the initiative, the Bank of Canada also sees private sector stablecoins, like Libra, as a potential trigger that would justify getting the ball rolling with CBDC issuance.

In this view, Canada aligns with the Eurozone and the United States in their aggressive stance towards Facebook's digital currency ambitions.

By far the most ambitious and momentous move in the CBDC landscape is China's digital yuan, which has already been piloted in major cities and key economic regions.

Dmitry Peskov, a special representative of the President of the Russian Federation on digital and technological development, has recently argued that the financial risks of CBDC issuance are so great that it may be more advantageous to wait on the sidelines and learn from others' experiences with implementation.

Having made significant progress with digital currency development and pilots, China now appears to be playing catch-up on the legislative and regulatory front.

The People's Bank of China released a draft law for public consultation last week that seeks, among other safeguards, to enshrine the digital yuan's primacy over potential third-party competitors.

On the supranational front, the Bank of International Settlements is coordinating with the central bank of Canada - alongside those of the United Kingdom, Japan, European Union, Sweden and Switzerland - to thoroughly assess CBDCs from a technical, regulatory and institutional standpoint.