In a year-end speech in Montreal, Bank of Canada Governor Tiff Macklem laid out the central bank’s evolving role in preserving “good money” while embracing innovation in payments and privately issued digital money. Macklem stressed that trust and stability in all forms of money remain core to the Bank’s mission and outlined new responsibilities, including supervising retail payments and, shortly, regulating stablecoins.
Speaking to the Chamber of Commerce of Metropolitan Montreal on December 16, Macklem framed central bank money as the foundational layer of the financial system, backed by public confidence and used as a reliable medium of exchange, store of value and unit of account. He reiterated that both physical cash and digital forms must be trustworthy, emphasizing the Bank’s commitment to ensure money can be redeemed at par and retains its purchasing power.
Trust, Cash and the Future of Payments
Macklem described “good money” as money that is secure, widely accepted, and resilient, explaining that true money consists of both its physical form and the infrastructure that moves it. He highlighted that central bank money, such as cash and settlement balances, underpins the broader financial system because the institution stands behind it fully.
While acknowledging the ongoing decline in cash use, Macklem affirmed its continued relevance due to reliability during outages and absence of cyber risk, noting that a significant share of Canadians still use cash regularly. He also confirmed ongoing enhancements to banknotes, including advanced security features on upcoming new series notes.
On digital innovation, Macklem said stability does not mean resisting change, pointing to the Bank’s expanded remit that now includes retail payments oversight and soon stablecoin regulation and consumer-driven banking oversight. This marks a clear shift toward engaging with privately issued digital money and broader payments innovation within the Bank’s supervisory framework.
Macklem’s remarks come amid broader Canadian policy developments on digital money and regulation. Canada’s government is advancing stablecoin legislation and the Bank has been monitoring retail CBDC developments and preparing related research, while maintaining a focus on ensuring monetary stability and payment system resilience.
The Bank of Canada has previously explored technical frameworks for a retail CBDC and continues to study digital currency design and payment system evolution globally, indicating that innovation remains part of future strategic planning even as current focus prioritizes stability and trust.
Macklem’s emphasis on trust echoes broader central bank debates in other jurisdictions, where policymakers balance innovation with foundational monetary stability, as seen in European discussions around digital euro design constraints and banking system impacts.
As central banks navigate evolving payments landscapes, Macklem’s speech signals Canada’s approach will anchor innovation in traditional monetary principles, pursuing regulatory clarity for digital assets while safeguarding the core functions of money.