In brief
- Outgoing Bank of Canada Governor Stephen Poloz didn't put much stock in Bitcoin.
- The central bank declined to commit to issuing a central bank digital currency in February 2020.
- Tiff Macklem takes over on June 2, in the middle of a global downturn spurred by COVID-19.
Canadian Finance Minister Bill Morneau today appointed Tiff Macklem as the new governor of the Bank of Canada. Macklem takes over from Bitcoin skeptic Stephen Poloz, who chose not to pursue a second term as leader of the country's central bank.
As the world's tenth-largest economy and a member of the G7, Canada plays an outsized role in international finance. The appointment of a new central bank governor, therefore, should have the attention of cryptocurrency traders and economists—as it might bring about a change in stance toward digital currencies.
In January 2018, current Governor Poloz made headlines by calling Bitcoin trading a form of gambling while simultaneously labelling blockchain a "genius" innovation.
In an end-of-year speech to the Empire Club of Canada, Poloz put forward a cash-centric vision for the central bank in 2020:
"I believe that central bank money—the bank notes you have in your pocket—will always provide an important public good: an individual’s sovereign right to make payments with an instrument that is universally accepted and final. A private digital currency cannot deliver that, regardless of how widespread its use may become."
Nonetheless, he indicated that the bank would research uses for a central bank digital currency.
On February 25 of this year, Poloz's deputy governor, Timothy Lane, reported on the status of that research:
"We are all familiar with the explosion of cryptocurrencies over the past few years. Bitcoin and similar digital assets were introduced with the hopes of becoming the money of the future. That hasn’t happened, nor is it ever likely to. Transacting in cryptocurrencies such as Bitcoin is just too expensive, and their purchasing power is too unstable."
Instead, Lane claimed "stablecoins have better prospects for widespread adoption." He pointed in particular to the all-but-defunct Libra coin.
Ultimately, said Lane, government-printed cash was still widely used. Therefore, the central bank had "concluded that there is not a compelling case to issue a [central bank digital currency] at this time." However, he admitted that "the world can change very quickly." Any scenario in which private digital currencies became widespread or cash couldn't be widely used might prompt the bank to reconsider issuing a CBDC.
Macklem's views on digital currencies—whether private or the central bank variety—are less established. He previously served as the bank's senior deputy governor from 2010 to 2014, before Bitcoin was a household name. He has spent the last six years out of the government spotlight as dean of University of Toronto’s business school.
However, when he takes over on June 2, he'll face an economy shattered by the coronavirus and a society whose relationship to dirty money may have shifted significantly since just a few months ago.