Bank of Canada Senior Deputy Governor Carolyn Wilkins planned to help companies develop new technologies to protect consumers and avoid market crashes.
The Deputy Governor said on Friday, while fintech innovations promise to solve some present problems, they could also create new ones.
“Authorities should support innovation, but the bar will be high, especially for core financial services,” Wilkins said. “I worry that players not covered currently by regulation could become important to the system even if they never take on bank-like risks.”
Currently, the Bank of Canada is studying the concept of digital currency and how it can be used to move large amounts of money between commercial banks, and for supplying bank notes.
“Like many other central banks, we are also researching the conceptual merits of issuing electronic money ourselves,” Wilkins said. She also said it’s “highly unlikely” that a currency such as bitcoin will replace money backed by governments, and “the most that could happen is that national currencies and digital currencies coexist.”
The Deputy Governor said the apex bank is already in contact with fintech entrepreneurs. She gave more details on her statement earlier this week that the Bank of Canada is working with the nation’s largest commercial lenders, Payments Canada and the R3 consortium, a group of more than 40 banks including Barclays Plc and JPMorgan Chase & Co., to better understand the mechanics of the blockchain.
“The plan is to build a rudimentary wholesale payment system to run experiments in a lab environment,” Wilkins said. “Because it cannot be used anywhere else, it is a different animal altogether from a digital currency for widespread use.”