According to an internal government document, senior federal officials considered whether cryptocurrencies provide inflation protection shortly after Opposition Leader Pierre Poilievre made the request as a presidential candidate. the conservative leadership.
The Privy Council Office, whose role is to provide nonpartisan advice to the prime minister and cabinet, prepared a briefing note on the viability of digital currencies for the head of the civil service weeks after Poilievre’s comments end of March.
The briefing note, obtained by The Canadian Press through a freedom of information request, says that “in light of inflationary pressures, some proponents have touted the ability of crypto-assets like bitcoin and ethereum to “decentralize” the Canadian economy, providing a substitute for the national currency.
But cryptocurrencies have failed to provide inflation protection and serve as poor substitutes for the Canadian dollar for day-to-day transactions, says the document, which was delivered to the Clerk of the Privy Council in early May.
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Cryptocurrencies are not a way to ‘get out of inflation’: Bank of Canada official
The document, which was only lightly redacted by freedom of information officials, said asset price volatility has been “extremely volatile.” This limits their use as a “store of value, a key feature of a well-functioning currency,” he says.
“Crypto-assets have also not been inflation-protected, with most of their use being speculative and with price behavior consistent with that of risky assets.”
A Privy Council Office spokesperson said the briefing note was prepared to provide the Registrar with general information about crypto-assets, “including information on whether they offered inflation protection. “.
In late March, Poilievre suggested at a campaign event that digital currencies could help Canadians “get out of inflation” because they aren’t swayed by central banks.
Speaking at a shawarma shop in London, Ontario that accepts bitcoin as payment, Poilievre promised to make the country more crypto-friendly.
But over the summer bitcoin’s value plummeted and it lost more than half its value compared to the start of the year – a similar fate to other digital currencies.
The briefing also discussed whether monetary stimulus is primarily responsible for high inflation and rising prices for goods and services, a claim it says is championed by “crypto asset proponents.”
Monetary stimulus is “just one of many factors that have contributed to the current surge in inflation,” the document says. Other factors include pandemic-related supply chain issues and Russia’s invasion of Ukraine.
The document says the Bank of Canada’s stimulus measures have helped accelerate the country’s economic recovery.
Poilievre has been a vocal critic of central banking and a proponent of the idea that stimulus has caused higher inflation. He promised during the leadership campaign that if elected prime minister, he would fire the bank’s governor, Tiff Macklem.
Since becoming leader on September 10, Poilievre has said little about the topic of cryptocurrencies. His office did not immediately respond to a request for comment Wednesday.
Conservative MP Michelle Rempel Garner was due to introduce a private member’s bill to develop a cryptocurrency growth plan on day one of the House of Commons resumption, but the bill was delayed.
In a statement, Rempel Garner’s aide said scheduling conflicts meant MPs agreed to move debate time for three private member’s bills.
Liberals have seized on Poilievre’s support for cryptocurrency as a line of attack on social media and in the House of Commons since returning from summer recess.
“Telling people they can get out of inflation by investing their savings in volatile cryptocurrencies is not responsible leadership,” Prime Minister Justin Trudeau said earlier this month. “By the way, anyone who followed this advice would have seen their savings destroyed.”
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Privy Council briefing note says while cryptocurrencies have become more popular, “there is no clear expectation” among regulators, central banks and the financial industry that cryptocurrencies will be adopted into the mainstream as a substitute for traditional currencies.
If cryptocurrencies were to stabilize and gain wider adoption, monetary policy could become less effective, leading to more prolonged economic downturns, he says.
Senator Tony Dean, who previously led the Ontario Public Service, said it’s common for public servants to prepare briefing notes on a range of issues, and these are sometimes prepared proactively, without request from the top.
“He is then available in the event that issue or opportunity becomes of interest (to) the government,” Dean said.
Dean said Poilievre’s “meaningful” and “unusual” comments might have spurred the public service to look into cryptocurrency.
“I’m not surprised that a note is generated on an issue like this,” he said. “It’s kind of a novel. It’s controversial. It’s done by one of the competitors in a campaign, and that person can talk a bit more about it and update it.
© 2022 The Canadian Press