Canada’s central bank announced it will collaborate with the Massachusetts Institute of Technology (MIT) on a 12-month-long project to explore a central bank digital currency (CBDC).
The Bank of Canada will work with the MIT Media Lab’s Digital Currency Initiative (DCI) team. Together, they intend to understand how different advanced technologies could inform the potential design of a CBDC.
This exploration will bolster the Bank of Canada’s understanding and potential handling of such an instrument, the bank said in a statement.
“It will focus on exploring and experimenting with potential technology approaches to determine how a CBDC could work.“
Bank findings will be made public on completion of project
It forms part of the bank’s wider efforts regarding research and development into digital currencies and fintech. While the bank said it has still not made an official decision whether it will ultimately introduce a CBDC in Canada, an update on the findings and outcomes would be provided upon completion of the project.
The work builds on the DCI’s ongoing research into CBDCs. Last month, in collaboration with the Federal Reserve Bank of Boston, it released a 35-page white paper detailing the development of transactions processing software.
Under an open-source license, MIT and Boston Fed researchers released the software as OpenCBDC, which will allow anyone to inspect, modify, and enhance the code.
Earlier this year, the U.S. Federal Reserve published a lengthy paper on a dollar-based central bank digital currency, which also solicited input from the public and lawmakers. The Fed is currently led by Chair Jerome Powell who has said it would not move forward with a digital dollar without the support of the White House and Congress.
Entitled Money and Payments: The U.S. Dollar in the Age of Digital Transformation, the paper, which discusses the potential benefits and risks of CBDCs in the U.S. economy, was published on Jan 20.
President Joe Biden made a similar request of his administration, asking his cabinet departments to consider how they might best prepare for a digital dollar in a recent executive order.