Bank of Canada Governor Reveals: Banknotes Will Not Disappear, Stablecoins Must Be Regulated by the State

The Governor of the Bank of Canada, Tiff Macklem, delivered a speech outlining the future of money, emphasizing the four key characteristics of good currency: safety and reliability, free convertibility, low transaction costs, and stable purchasing power. Canada’s paper currency amounts to CAD 120 billion, while digital currencies reach CAD 1.6 trillion, yet 80% of Canadians still use cash. A new generation of 3D anti-counterfeiting banknotes will be issued starting in 2027, and stablecoin regulation legislation will be promoted in 2026.

1.6 Trillion Digital Currency and 120 Billion Cash Coexistence Logic

In his speech, Macklem revealed a shocking set of data: the total value of circulating banknotes in Canada is about CAD 120 billion, while digital funds in checking accounts reach CAD 1.6 trillion, far exceeding cash. This 13-fold gap seems to suggest that cash is about to disappear, but the Bank of Canada’s stance is quite the opposite— the popularity of digital payments does not mean the end of cash.

Surveys show that about 80% of Canadians (across all age groups) and 96% of small and medium-sized enterprises still use cash. This data breaks the stereotype that “young people don’t use cash,” showing that cash still plays an indispensable role in Canadian society. Macklem pointed out that cash has advantages such as simplicity, wide acceptance, low cost, and reliability. Especially during power outages, internet disconnections, or cyber security incidents, cash remains a dependable payment method.

To maintain cash as “good money,” the Bank of Canada continues to enhance banknote anti-counterfeiting technology and accessibility. The new generation of banknotes will begin issuance in 2027, with the CAD 20 banknote featuring 3D dynamic anti-counterfeiting features and images of King Charles III and the National Vimy Memorial. Future issues will include a CAD 5 banknote with the Triffid’s image, as well as more secure large-denomination banknotes of CAD 50 and CAD 100. The Bank of Canada commits to ensuring the continued supply and easy access to cash, regardless of digital payment developments, to safeguard all citizens’ payment choices.

This insistence on cash reflects the central bank’s emphasis on financial inclusion. Not everyone owns a smartphone or a bank account, and cash provides equal participation opportunities for these groups. Additionally, the anonymity of cash offers some privacy protection, a feature that digital payments find difficult to replicate.

Core Requirements for Stablecoin Regulation

Stablecoins, as cryptocurrencies pegged to fiat currency values, are seen as the frontier of digital currency development. Unlike more volatile cryptocurrencies like Bitcoin, stablecoins are designed to always be exchangeable at face value for fiat currency, combining the technological advantages of crypto with monetary stability. Currently, mainstream stablecoins like Tether and USDC are pegged to the US dollar, and Canada is exploring stablecoin schemes linked to the Canadian dollar.

The U.S. “Genius Act” has established a regulatory framework for stablecoins, and Canada announced in the 2025 federal budget that the Bank of Canada will be responsible for stablecoin regulation, with relevant legislation underway. Macklem emphasized that stablecoins must become “good money” and meet four core requirements.

Four Regulatory Requirements for Stablecoins by the Bank of Canada

Pegged to central bank currency and supported by high-quality liquid assets: Ensuring stablecoins have real reserves, not just air

Support for redemption at face value anytime with transparent fees and conditions: Guaranteeing holders can easily exchange for fiat currency

Issuers with operational resilience to ensure system reliability: Preventing runs caused by technical failures or mismanagement

Consumers enjoy protections equivalent to bank deposits: Providing safety nets like deposit insurance to safeguard holders’ rights

The Bank of Canada will cooperate with the Ministry of Finance to promote relevant regulations by 2026, enabling Canadians to use stablecoins safely and confidently. This timeline indicates Canada’s relatively proactive stance on stablecoin regulation—neither outright banning as some countries do nor completely laissez-faire as others. This balanced regulatory approach aims to find the optimal point between protecting consumers and encouraging innovation.

Open Banking and Data Autonomy Revolution

Open banking (also known as consumer-driven banking) is another new responsibility for the Bank of Canada. Its core is to give consumers greater control over their personal financial data, enabling more flexible comparison, selection of financial services, or authorization of third parties (such as financial management apps, investment tools) to access data. This concept has been implemented in Europe and the UK for years, and Canada is following suit.

Open banking can enhance competition and efficiency in the financial system and promote product innovation. Imagine a scenario: you authorize a financial app to read your account data across different banks, automatically comparing mortgage rates to find the best deal, or identifying the investment portfolio that best matches your risk appetite. This data flow breaks the monopoly of banks over customer information, compelling financial institutions to offer better services and lower prices.

The Bank of Canada will draw lessons from its experience in payment security and fund regulation to ensure data sharing processes are secure and transparent, while reducing fraud risks. This is a key challenge—opening data means more potential security vulnerabilities. If third-party financial apps lack adequate security measures, it could lead to data leaks or misuse. Therefore, the Bank of Canada’s regulation will focus on certifying the qualifications of third-party service providers and establishing strict data usage standards.