UPDATE 1-Bank of Canada does not see currently see strong case for issuing digital currency

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OTTAWA, May 26 (Reuters) – The Bank of Canada is thinking in more concrete terms about how its digital currency might look and work but it does not currently see a strong case for issuing one, a deputy governor said on Wednesday.

The central bank is well into the development process on a cash-like digital currency that it could release to the public, should the need arise. A number of other central banks are doing similar work.

“In terms of where we are with the project … we don’t currently see a strong case for issuing it, but the world is progressing very rapidly,” Deputy Governor Timothy Lane said in a panel discussion on cryptocurrencies.

Lane said the Bank of Canada is keeping an eye on factors that could prompt it to move, such as a sharp drop in cash usage in Canada, or if a large technology company were to launch a cryptoasset that quickly gained traction with consumers.

Lane said the bank had undertaken various “proof-of-concept” experiments with private-sector partners but would have to do “a whole lot more” before it settles on a model for its planned digital currency.

“We’re now at a phase where we’re actually thinking in more concrete terms of, well if we were going to launch something … then what would it look like, what attributes would it have, and how would it connect with the rest of the financial system?” he said.

Lane noted that while a central bank digital currency could not be fully anonymous, it would have to be private enough for consumers to use without worrying about their personal data being tracked.

The Bank of Canada said last week that cryptoasset markets were an emerging vulnerability for Canada’s financial system, even though price volatility is keeping cryptocurrencies like Bitcoin from being widely adopted as a payment method.

Lane said that Bitcoin is used “largely as a speculative asset currently.”

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