Bank of Canada. Source: Toronto CityNews
Carolyn Rogers – senior Deputy Official for the Bank of Canada (BOC) – recently denied the notion that cryptocurrencies could be a viable hedge against inflation. Citing their volatility, she stated that digital assets “don’t meet the test” of a stable source of payment, or value.
Liberal MP Yvan Baker asked the official on Monday whether digital currencies like Bitcoin could be an effective way for regular people to opt-out of inflation.
Like the United States, Canadian inflation is trending at an over 30-year high. March’s annual CPI increase clocked in at 6.7% – about the same as the US from November, and a whopping 100-basis points higher than the previous month.
“We don’t see cryptocurrencies as a way for Canadians to opt-out of inflation or a stable source of value,” said the official.
Bitcoin is often referred to as “digital gold” by industry insiders, due to its limited supply cap of 21 million coins. This makes it immune to monetary debasement caused by money printing, which is thought to be a primary culprit of inflation today.
Yet many have hesitated to think of it as such – especially bankers. ECB President Christine Lagarde maintains that Bitcoin is not a true currency, and rather a “highly speculative asset”. Meanwhile, Fed Chairman Jerome Powell has claimed that Bitcoin is neither a suitable store of value nor a medium of exchange.
Despite opposing cryptocurrencies as assets, the governor did recognize some “important innovations” within the space, and would like to capitalize on those benefits in a “regulated environment”. The Bank of Canada has already moved into the “developmental stage” for a possible CBDC, though the decision to adopt one will ultimately be up to parliament.
Nevertheless, fellow governor, Tiff Macklem rejected the idea of ever substituting the Canadian dollar with cryptocurrency.
“We certainly expect the Canadian dollar will remain at the center of the Canadian financial system,” he said.
Distaste for Bitcoin isn’t uniform within Canadian congress: Conservative MP Pierre Poilievre has voiced support for it as an alternative to Canada’s devaluing dollar. The politician is currently campaigning to become the leader of the conservative party, and to eventually contest Justin Trudeau’s seat as Prime Minister.
In a public campaign ad last month, he called for Canada to take control of their money back from bankers and politicians, and to become the “blockchain capital of the world”.
Maxime Bernier – a libertarian third-party leader – also showed support for Bitcoin leading up to Canada’s federal election last year. He called it a “new and innovative” way to counter central banking.