Bank of Canada demands cash-like backing as Ottawa moves to regulate stablecoins
Stablecoins in Canada will need to behave like cash, not crypto bets, if they want a place in the financial system.
According to BNN Bloomberg, Bank of Canada governor Tiff Macklem told a Montreal audience that any Canadian stablecoin must be “pegged at a one-to-one ratio to a central bank currency and be backed by high-quality liquid assets so that it can always be converted to cash at par.”
He said, “We want stablecoins to be good money, like bank notes or money on deposit at banks.”
BNN Bloomberg report that the Liberal government plans to introduce stablecoin regulations next year, covering cryptocurrencies “convertible to a fiat currency at par.”
Draft legislation described by the Financial Post outlines a framework for fiat-backed stablecoins tied to another asset, such as an existing currency.
The Financial Post notes that their value is meant to be more stable than volatile assets like Bitcoin, which “tend to act as an investment vehicle rather than something used to pay for goods and services.”
Macklem said that high-quality liquid assets are usually government-backed securities such as treasury bills, government bonds and treasury bonds.
He added that conditions for buying and redeeming stablecoins, including timing and “any fees that need to be paid,” must be fully disclosed and clear to consumers and businesses.
He also said “the technology is evolving rapidly and the regulatory framework will need to evolve to keep pace with the changing landscape,” according to the Financial Post.
BNN Bloomberg said Ottawa wants Canada’s financial system to catch up with other advanced and developing economies, including the United States, that are “tapping into the potential of cryptocurrences.”
The finance ministry said the legislation aims to “help built trust in the system so that fiat-backed stablecoins are safe and secure for consumers and businesses to use,” with the Bank of Canada as regulator.
Macklem summed it up by saying “the goal is to ensure Canadians can leverage the innovation of stablecoins and do so safely,” according to BNN Bloomberg.
The Financial Post added that he said the Bank of Canada will regulate these “emerging digital currencies so Canadians can use them safely and confidently alongside physical cash,” while noting it is not yet clear how large a role stablecoins will play in the future of money.
Against that backdrop, Macklem made clear that one core reference point for markets will not move.
He said “one thing that won’t be changing is the central bank’s two percent inflation target.”
He argued that “flexible inflation targeting has proven to be more successful and more durable than anything that came before,” and said that “faced with a more shock-prone world, the anchor provided by the two percent target looks more important than ever.”
Macklem expects more financial innovation in 2026 as Canada modernizes payments, including the Real-Time Rail system for instant settlements in Canada and across borders, and work on an open banking system to make it easier for consumers to compare and switch banks.
