The transition to a cashless economy is accelerating in several countries including Canada. To replace cash payments including personal loans online, blockchain technology could give a serious boost.
Cryptocurrencies, however, raise concerns, particularly with regard to the security of transactions, as reported in a recent article by Cointelegraph, a digital media specializing in crypto assets.
It is predicted that by 2030, only 10% of the money spent in Canada will be spent on cash.
What Does A Cashless Future Mean?
Even if thinking about cryptocurrencies has started, Canadian authorities are in no rush to move from cash to digital. In October 2018, a study by the Bank of Canada described a number of issues related to the elimination of cash, including the reluctance of seniors to turn to electronic payments.
Maintaining operational reliability also raises fears and measures will have to be envisaged to remedy this, including that of issuing a digital currency but not a cryptocurrency. It’ would be a digital variation of the Canadian dollar which is going to contend with private payment systems.
Impact on consumption
Another Bank of Canada study found that a cryptocurrency could potentially benefit the country’s economic well-being. It “could lead to a 0.64% increase in consumption for Canada compared to economies where payments are made only in cash,” reports the Cointelegraph.
To deepen its understanding of new financial technologies, the Bank of Canada is conducting, in collaboration with TMX Group and Payments Canada, the Jasper research project, the flagship ledger technology experiment launched in 2017. They would constitute an effective solution to automate real-time securities settlement.
For its part, since 2017, Royal Bank has been testing blockchain technology to facilitate the transfer of payments between its establishments located in the United States and Canada. In particular, it has deployed software developed by Hyperledger which enables it to monitor transactions in real-time between the two countries.
What is done elsewhere
Other countries are preparing the transition to digital payments. In Australia, there has been the introduction of a bill clarifying that purchases of over 10,000 Australian dollars (about 6,750 dollars) in cash would not be legal. According to the government, this measure will deter tax evasion and encourage the transition to a cashless society.
For its part, Germany is a bit apart in the European Union while the country does not impose any restrictions on the use of cash payments. A plan to limit cash transactions to 5,000 euros (about C $ 7,300) – both domestically and throughout the eurozone – has sparked a negative reaction in German society. The fact remains that the country is in the process of revising its position in this area.
Since last year, it legally identifies bitcoin being a currency and has removed value-added tax whenever paying for services and goods with the use of cryptocurrencies.
Sweden is said to be one of the most advanced countries towards a cashless economy. The percentage of money used in this country has decreased considerably (representing only 2% of transactions) and less than 20% of stores accept cash.
This was made possible thanks to the efforts of the authorities, the unprecedented public confidence in banking structures, and the promotion of the Swedish national mobile payment system, used by more than half of the population. Small Swedish businesses have also moved to cashless payments.
In addition, the central bank of Sweden, the Riksbank, has been testing since November 2018 the first Swedish cryptocurrency called e-krona. Its chief economist, Gabriel Söderberg, believes that blockchain technology is very promising and that there will be different forms of applications in society.
If it is certain that liquidity will become digital in the more or less long term, like others he wonders about the role that blockchain technology will play in this shift.
“Right now, many of us are studying how blockchain could help future payments. I am fully open to the possibility that this could potentially be incorporated into certain forms in future payment systems, but we do not yet know to what extent, ”he summarizes.