A central bank digital currency (CBDC) could give Canada an advantage by making it easy to move money into and out of stablecoins—crypto tokens pegged to the value of a state-issued currency—and tokenized deposits without involving a bank, the Toronto-based think tank argued in a new report. (The Logic)

Talking point: The report’s authors argue a Canadian CBDC could help address growing concerns about the risks to monetary sovereignty posed by the rapid growth of U.S.-dollar stablecoins for everyday payments. While stablecoins are issued by private companies and backed by reserves of cash and government debt, CBDCs are issued directly by a central bank. By integrating a Canadian-dollar CBDC into stablecoin settlement, the Bank of Canada could maintain its relevance in a future payments system, the report’s authors argue. The Bank of Canada has been conducting research on a possible CBDC for years and two of its staff previously put out a paper arguing Canada is very likely to eventually need to issue one.