The budget provides $17.7 million in funding over five years to fund a study that, among other things, will examine the need for a central bank digital currency (CNBC) in Canada.
A number of countries are exploring the potential of MNBCs, with the idea that their development might improve payment systems, foster financial innovation and improve inclusion, while potentially reducing credit and liquidity risk.
However, there are also concerns that the introduction of MNBCs might undermine bank deposits, which have been a traditional source of bank funding, while reducing banks’ income from payment processing.
Furthermore, it is unclear exactly how the presence of digital dollars might affect the financial system in the event of a credit or liquidity crisis. They may also give rise to other new risks, such as increased cyber risk.
In addition to the review of MNBCs, the government said the review will also focus on how to adapt the financial sector regulatory framework to address the risks posed by the digitization of money and how to maintain security and the stability of the financial sector in the context of the development of these emerging technologies.
“The first phase of the review will cover digital currencies, including cryptocurrencies and stablecoins,” the government said in the budget Thursday.
The complaints process will be changed
The budget also reiterated the federal government’s commitment to amending financial sector legislation to overhaul the banking sector’s dispute resolution regime.
Specifically, the government has indicated that it will introduce changes to “provide for a single, not-for-profit external complaints body in the banking sector and to strengthen the complaints handling system”.
The measure aims to address concerns regarding the existing system, which allows for competition in handling complaints, by allowing banks to choose whether customer complaints that cannot be resolved internally should be referred to the Services Ombudsman Banking and Investment Services (OBSI), which acts as an ombudsman, or the ADR Chambers – Office of the Banking Ombudsman (ADRBO)). Currently, four of the six major banks use ADRBO, while only two (and a large number of smaller institutions) are members of OBSI.
Last year the Department of Finance conducted a review of the current complaints handling system. The exercise led the government to conclude that reform was needed to establish a single, independent service to deal with consumer complaints. This commitment was carried over into this year’s budget.
“Canadians deserve a fair and impartial process to address unresolved complaints with their banks,” the government said in the budget. Banks should not be able to choose which complaints body they participate in, and the system should not be run on a for-profit basis. »
