Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/297084 
Year of Publication: 
2023
Series/Report no.: 
Bank of Canada Staff Discussion Paper No. 2023-15
Publisher: 
Bank of Canada, Ottawa
Abstract: 
We discuss the payment habits of Canadians both in the current payment environment and in a hypothetical cashless environment. We also consider whether a central bank digital currency (CBDC) would address unmet payment needs in a cashless society. Most adult Canadians do not experience gaps in their access to a range of payment methods, and this would probably continue to be the case in a cashless environment. Some people could, however, face difficulties making payments if merchants no longer generally accepted cash as a method of payment. For a payment-oriented CBDC to successfully address unmet payment needs, the main consumer groups-who already have access to a range of payment options-would have to widely adopt the CBDC and use it at scale. This is necessary to encourage widespread merchant acceptance of CBDC, which would, in turn, encourage further consumer adoption and use. However, most consumers face few payment gaps or frictions and therefore might have relatively weak incentives to adopt and-especially-to use CBDC at scale. If that were the case, widespread merchant acceptance also would be unlikely. This suggests that addressing unmet payment needs for a minority of consumers by issuing a CBDC could be challenging under the conditions explored in this paper. The minority of consumers with unmet payment needs will only be able to benefit from a CBDC if the majority of consumers experience material benefits and therefore drive its use.
Subjects: 
Bank notes
Central bank research
Digital currencies and fintech
Financial services
JEL: 
C
C1
C12
C9
E
E4
O
O5
O54
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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