That scenario would raise several potential concerns: payment services offered by large financial institutions could become the only game in town, giving them increased market power; people without adequate banking services would find it even more difficult to participate fully in the economy; people would lose the ability to conduct transactions privately; and the system could have a single point of failure, making it more vulnerable to computer system breakdowns and power outages.
Of course, even such a shift toward a cashless society does not automatically mean the Bank would issue a CBDC. That’s a choice that Canadians and their elected representatives would need to make at the time. A second scenario that may lead to considering a CBDC is widespread use of private digital currencies.