The Bank of Canada will only accept stablecoins in Canada if they are firmly tied to official currency, backed by high-quality liquid assets, and always redeemable at face value, Governor Tiff Macklem said.
During an end-of-year speech in front of the Chamber of Commerce of Metropolitan Montreal, Macklem said the central bank wants any stablecoin used by Canadians to function like trusted cash or a bank deposit. To qualify as what he called “good money,” he said, a stablecoin must have a one-to-one peg to a central bank currency and be backed by safe, liquid assets so holders can convert it into cash at par at any time.
He added that issuers must publish clear rules for redemption, including how long it takes and any fees charged. Providers also need strong operations and risk management so that payment services remain available and client funds are protected. Stablecoins offered to the public in Canada, he said, should meet these conditions as a basic requirement.
Macklem drew a clear line between stablecoins and crypto assets such as Bitcoin. Bitcoin created its own unit of account, he said, but violent price swings and limited everyday use mean it functions more like a speculative investment than money. Stablecoins, by contrast, are designed to remove most of that volatility and act as a practical way to pay, provided they are properly backed and supervised.
The governor widened the discussion to the nature of money itself, saying economists see it as something that measures value, stores value, and allows people to trade with confidence. In his view, money is both cash and digital entries on a screen, and without reliable infrastructure, it can’t function in the economy.
Macklem said most Canadian money is already digital, mainly in checking accounts, making the strength of banks and payment systems crucial. Regulators oversee financial institutions and provide deposit insurance, while the Bank supervises key payment, clearing, and settlement systems and now monitors retail payment providers that run digital wallets, point-of-sale terminals, and cross-border transfers.
However, despite the growth of digital payments, he noted that cash still matters. A large majority of Canadians and most small and medium-sized businesses continue to use notes, which account for about one in five point-of-sale transactions, and demand for cash is rising along with the economy.
Why Is The Bank Of Canada Insisting On High-Quality Liquid Backing For Stablecoins?
Canada’s focus on high-quality liquid backing reflects growing concern among central banks and global watchdogs that weakly backed stablecoins could pressure the wider financial system. If the reserves behind a token are risky, complex, or difficult to sell, even a small shock can trigger a rush to cash out, forcing issuers to dump assets and putting strain on funding markets.
By requiring reserves to sit mostly in cash and short-term government securities, policymakers are trying to make sure redemptions can be met without facing any issues and that stablecoins continue to trade at their face value, instead of breaking away from the Canadian dollar.
In policy terms, Canada is trying to capture the efficiency gains of faster, more digital payments while keeping the core principle of money intact.
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