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Economy

Bank of Canada says cryptoassets’ volatility is obstacle to payment acceptance

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Price volatility is keeping cryptoassets from being widely accepted as a means of payment, the Bank of Canada said on Thursday, though the markets’ rapid evolution is an emerging vulnerability to Canada‘s financial system.

The central bank said it is monitoring cryptoasset markets, which have surged in popularity in the last year as they have become easier for consumers to access through exchange-traded funds, listed companies and other investment vehicles.

Despite the broadening interest, cryptoassets like bitcoin and other cryptocurrencies remain high risk as their intrinsic value is hard to establish, the Bank said in its annual review of Canada‘s financial systems.

“Price volatility stemming from speculative demand remains an important obstacle to the wide acceptance of cryptoassets as a means of payment,” it said.

Bitcoin, the biggest and most popular cryptocurrency rose nearly 14% on Thursday to $42,000, after plunging 14% a day earlier to its lowest since late January.

The Bank of Canada added that while cryptoasset markets are currently not of “systemic importance” in Canada, that could change if a major technology firm were to issue a cryptocurrency that became widely accepted as a digital payment method.

The Bank of Canada is currently developing its own cash-like central bank digital currency that it could issue to the public, should the need arise. Many other top central banks are doing similar work.

Digital currency group Diem Association, formerly known as Facebook Inc’s Libra project, said this month it plans to launch a pilot of a U.S. dollar stablecoin, though did not say when.

Stablecoins are backed by traditional assets and are a potential solution to the price volatility of cryptoassets, though they also pose risks, the central bank said.

“Unless stablecoins are backed exclusively by Canadian dollars, their widespread adoption could inhibit the Bank’s ability to implement monetary policy and act as lender of last resort,” it said.

(Reporting by Julie Gordon and David Ljunggren in OttawaEditing by Marguerita Choy)

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Economy

Canada selects HSBC, TD Securities as advisors for inaugural green bond issue

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The Government of Canada has selected HSBC and TD Securities as structuring advisors for its first ever issue of green bonds, expected in the current fiscal year that began in April, HSBC said in a statement on Monday.

HSBC and TD Securities were hired to advise on the design of Canada‘s green bond framework, assist in the development of the on-going program and support a successful inaugural issuance, the statement added.

 

(Reporting by Fergal Smith; Editing by Chizu Nomiyama)

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Economy

Canadian first quarter industry capacity use rises to 81.7%

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Canadian industries ran at 81.7% of capacity in the first quarter of 2021, up from a upwardly revised 79.7% in the fourth quarter of 2020, Statistic Canada said on Friday.

The increase in the first quarter was driven by gains in construction and in mining, quarrying, and oil and gas extraction.

Following are the rates in percent:

Q1 2021 Q4 2020 (rev) Q4 2020 (prev)

Cap. utilization 81.7 79.7 79.2

Manufacturing 76.5 76.7 76.2

NOTE: Economists surveyed by Reuters had forecast a first quarter rate of 80.6% capacity utilization.

(Reporting by Steve Scherer, editing by Dale Smith (steve.scherer@tr.com))

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Economy

UK, Canada agreed to redouble efforts for trade deal

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British Prime Minister Boris Johnson and Canadian Prime Minister Justin Trudeau agreed on Friday to redouble their efforts to secure a trade agreement as soon as possible to unlock such a deal’s “huge opportunities”.

“The leaders agreed a comprehensive Free Trade Agreement between the UK and Canada would unlock huge opportunities for both of our countries. They agreed to redouble their efforts to secure an FTA (free trade agreement) as soon as possible,” Downing Street spokesperson said in a statement.

“They discussed a number of foreign policy issues including China and Iran.”

 

(Reporting by Guy Faulconbridge, writing by Elizabeth Piper)

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