Central Bank Digital Currency (CBDC): How Will It Work in Canada?

May 1, 2025

Central bank digital currency (CBDC) is an alternative to paper and coin currency issued by a country’s central bank. The Bank of Canada is considering how to implement CBDC.

Written by Barry Choi

Contributing Writer

Edited by Siddhi Bagwe

Editor & Content Strategist

Written by Barry Choi

Contributing Writer

+ 1 more

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own.

Editor's Note: The Bank of Canada has put the Canadian CBDC project on the back burner until further notice. NerdWallet will update this page as more information becomes available.

A CBDC is a digital currency issued by a country’s official central bank.

In Canada, CBDC would be issued by the Bank of Canada. A Canadian CBDC would be a digital version of Canadian paper notes and coins. It would provide the same value and benefits as cash.

Does CBDC exist in Canada yet?

CBDC does not currently exist in Canada. The Bank of Canada first launched public consultations on a Canadian digital currency in May 2023. Over 85,000 Canadians participated in the conversation by providing feedback of their needs and expectations.

Is a central bank digital currency the same as cryptocurrency?

No, a CBDC and cryptocurrency are two distinct things. Cryptocurrency is a private digital currency and a volatile asset. Its value fluctuates based on supply and demand. In addition, cryptocurrencies often have transaction fees and aren’t regulated by any central bank.

If a digital Canadian dollar were established, it would be backed by the government of Canada and regulated by the Bank. Since the value of a Canadian CBDC would be the same as a regular Canadian dollar, there will be no risk of drastic changes in value.

How CBDC would be issued and regulated in Canada

The Bank of Canada would issue and regulate CBDC in Canada to ensure it’s safe and accessible for everyone.

Note, the Bank of Canada maintains that it will not eliminate cash after a CBDC is adopted in Canada. It will continue to issue bank notes and coins.

Why CBDC matters to Canadians

During the COVID-19 pandemic, the Bank observed a shift in the way businesses and consumers conducted their transactions. Many people moved to contactless payments like the debit and credit card tap technology. This accelerated the Bank of Canada’s decision to consider creating a digital currency as an alternative to ensure that Canadians have an opportunity to take part in the global economy of the future.

Additionally, if cash were to ever lose its wide acceptance, the Bank of Canada would need to have a digital currency in place. It may also consider establishing a centralized low-cost, stable and accessible banking system with a digital transaction network that allows everyone to participate in the marketplace.

When will Canada create a CBDC?

Several years ago, the Bank of Canada began exploring the idea of issuing a digital currency and consider insights from public consultations on what features could be included in a CBDC.

Having completed extensive research, the Bank recently said that it's "scaling down its work on a retail central bank digital currency and shifting its focus to broader payments system research and policy development."

The Bank of Canada said it wants to prioritize research and development of Canada's payments infrastructure to prepare for the changing internal and global digital payment needs.

Pros and cons of CBDC in Canada

Even though if or when CBDC comes to Canada, it’s worth understanding how it could affect your life.

Pros

Safety: As a government-issued digital currency, CBDC will be protected just like cash.
Stability: Unlike cryptocurrencies, a CBDC would not fluctuate based on consumer supply and demand. The value of a CBDC in Canada would be the same as the Canadian dollar.
Accessibility: The Bank of Canada’s goal is to make a CBDC in Canada available to all, which would mean including people who don’t have bank accounts and only use cash.

Cons

Privacy concerns: If all your transactions are digital, there’s potential for increased surveillance of your spending, which could present privacy concerns.
Cost and complexity: Setting up a digital currency in Canada could be difficult and expensive. In addition, consumers would need a digital device to make transactions.
Vulnerability: Even though CBDCs are meant to be a safe form of payment, they may be vulnerable to hacking attempts.

Frequently asked questions

What are central bank digital currencies?

Central bank digital currencies (CBDCs) are a digital version of the country’s standard currency. Typically, the value of these digital currencies are the same as the country’s regular, or fiat, currency, such as Canadian dollars. A few countries have already introduced official CBDCs, and many others are researching their viability.

Can you invest in central bank digital currencies?

Yes, it’s possible to invest in central bank digital currencies. However, only a handful of countries have CBDCs in place, so you’ll have limited options. That said, since CBDCs have the same value as the country’s fiat currency, it may be easier to invest in individual currencies through the current foreign exchange market.

Sources

NerdWallet writers are subject matter authorities who use primary, trustworthy sources to inform their work, including peer-reviewed studies, government websites, academic research and interviews with industry experts. All content is fact-checked for accuracy, timeliness and relevance. You can learn more about NerdWallet's high standards for journalism by reading our editorial guidelines.