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Posthaste: The idea of a Bank of Canada digital loonie is making a lot of people nervous Back to video

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A lot of Canadians are willing to try out a Bank of Canada digital currency one day, but they’re also pretty nervous about the potential pitfalls, new research suggests.

A majority of people, or 59 per cent, say they’d use a digital currency from Canada’s central bank, although most don’t seem overly enthusiastic about it, according to a recent survey from WealthRocket, a personal finance website. Of that 59 per cent, 43 per cent say they’d be “somewhat willing” to use the coin, compared to 11 per cent who are “very willing” and five per cent who are “extremely willing.”

People appear to have a lot of fears around the safety of a potential digital Canadian dollar, and worries about fraud top the list for more than half. Another 53 per cent fear a central bank digital loonie would heighten the risk of cyberattacks, while 44 per cent are afraid their private data could be breached. Just over half think the Bank of Canada could be successful in keeping their data safe when using a digital dollar.

Others are more concerned about what such a coin would mean for the future of cash in Canada, and 45 per cent say they’re concerned it could end up eliminating physical currency altogether. Meanwhile, most don’t seem too keen on using digital money in place of cash when making purchases, and only a quarter say they’d jump right in and do so.

Some also harbour fears a crypto loonie could cause them to lose control over their finances. Many are also worried about other “unintended consequences,” which might include monitoring by the government. “The biggest concern is that gradually, a future government would have access to the transactions of citizens,” Ori Freiman, a post-doctoral fellow at McMaster’s University Digital Society Lab, said in WealthRocket’s report. “And that would be a nightmare for democracy and civil liberties, and potentially for human rights.”

Canadians need not be too concerned just yet. The Bank of Canada has made clear it doesn’t plan to introduce a central bank-backed digital dollar any time soon, but it’s also exploring the option, just in case. The bank recently asked for public input on the concept in a survey that ran from May until June 19, with the results set to publish later this year. “As Canada’s central bank, we want to make sure everyone can always take part in our country’s economy,” senior deputy governor Carolyn Rogers said in a press release announcing the poll in May. “That means being ready for whatever the future holds.”

The possibility that digital currencies, either private or issued by other central banks, could become common in everyday transactions has been a source of concern for the Bank of Canada in recent years. Policymakers contend widespread uptake risks destabilizing the Canadian dollar, ultimately posing a threat to the financial system. The central bank has been researching a digital loonie since at least 2013 as cryptocurrencies grew in popularity, and joins 100 other countries currently exploring the pros and cons of central bank-backed digital money.

Still, the Bank of Canada says a digital dollar isn’t necessary at this point and physical money is here to stay for as long as people want to use it.

“Cash isn’t going anywhere,” it said in May.

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Inflation growth slowed in May, after a brief April acceleration, due to lower gasoline prices and base-year effects. The consumer price index (CPI) rose 3.4 per cent in May year over year, as prices at the pump dropped 18.3 per cent, Statistics Canada said on June 27. Excluding gasoline prices, the CPI increased 4.4 per cent, following a 4.9 increase in April.

On a monthly basis, the CPI rose 0.4 per cent in May, following a 0.7 per cent gain in April.

Grocery prices rose nine per cent over the year, nearly unchanged from April’s reading of 9.1 per cent, and more than doubt the headline rate. Restaurant food prices jumped 6.8 per cent, from 6.4 per cent in April, due to ongoing labour shortages, rising input costs and expenses.

The mortgage interest cost index, a measure that reflects price growth in housing, increased to 29.9 per cent, the third consecutive month the index has risen to a new record high as Canadians continue to initiate and renew mortgages at higher interest rates.

Most economists expect the overall deceleration in inflation will do little to stop the Bank of Canada from hiking interest rates in July.

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Financing retirement represents a looming crisis for both Canada and Canadians, since huge numbers of baby boomers are shifting into retirement and we are living considerably longer lives than we used to. Unfortunately, we too often react with a simple shrug to crises that incrementally creep upon us, and longevity risk is by its nature gradual. Still, with more focus and access to the right set of financial tools, Canadians can solve this problem themselves. Fraser Stark offers some guidelines that can help Canada solve its slow-moving retirement crisis.

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Today’s Posthaste was written by Victoria Wells (@vwells80), with additional reporting from Financial Post staff, The Canadian Press, Thomson Reuters and Bloomberg.

Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@postmedia.com.