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Internal Finance Department documents show officials have deep concerns about the effect of Facebook’s planned digital currency on Canada’s financial stability.

Officials wrote in the briefing note last summer that they believed the social media company had yet to address multiple concerns and risks its digital currency posed to the financial system.

The July briefing note, obtained by The Canadian Press under the Access to Information Act, also says the government was working on options to ease the risks.

Officials appeared less concerned about rivals like Bitcoin — which the briefing note says has not played a large role in everyday transactions in Canada for various reasons.

Unlike Bitcoin, Facebook’s offering would be a “stablecoin” whose value would be less volatile and could easily be used by hundreds of millions of the social media giant’s users upon release.

The ease of use and stability of value are among the reasons governments and central banks like the Bank of Canada have taken a keen interest in the currency.

The underlying worry for policymakers has to do with loss of control in the event a private digital currency becomes accepted globally and used without a bank as an intermediary, said Moon Jerin, CEO of Doctrina, which provides advice to financial and insurance companies on blockchain technology.

Source: Canadian Broadcasting Corporation

Date: April 1st, 2021

Link: https://www.cbc.ca/news/politics/finance-dept-facebook-digital-currency-1.5968718

Discussion

  1. Why is bitcoin an unstable cryptocurrency?
  2. Why would Facebook’s cryptocurrency be a “stablecoin”?

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