Bank of Canada improves digital currency regulatory framework: Stablecoins must be fully pegged to central bank currency

Canadian Central Bank Governor Tiff Macklem delivered a speech at the Montreal Chamber of Commerce on Tuesday, unveiling the core principles of the upcoming stablecoin regulatory framework. According to the Bank of Canada’s policy plan, only stablecoins that meet “high-quality” standards and are strictly pegged to central bank currency will be approved. This initiative aims to ensure that stablecoins become reliable payment tools like banknotes and deposits, promoting the safe development of digital currencies within Canada’s financial system.

1:1 Central Bank Currency Peg as a Necessary Condition

Macklem explicitly emphasized that the Bank of Canada’s requirements for stablecoins are very strict. All approved stablecoins must maintain a 1:1 fixed peg to central bank currency, meaning each stablecoin must be backed by an equivalent amount of central bank money. Additionally, these reserve assets must be “high-quality liquid assets,” which can be easily converted into cash at any time. Typically, these include government treasury bills and government bonds, ensuring that the rights of stablecoin holders are fully protected.

Multi-layer Risk Control and Data Security Framework

In the “Budget Report” released by the Bank of Canada at the end of 2025, the responsibilities of stablecoin issuers are detailed. Besides maintaining sufficient reserves, stablecoin issuers must establish clear redemption policies that allow users to exchange stablecoins back into fiat currency at any time. Furthermore, the Bank of Canada requires all stablecoin issuers to implement comprehensive risk management frameworks, covering multiple dimensions, including strict protection measures for personal and financial data to prevent data leaks and misuse.

Balancing Security Innovation and Consumer Protection

Macklem stated that the core purpose of establishing these strict digital currency regulatory standards is to “ensure Canadians can safely harness the innovative potential of stablecoins.” By creating such a regulatory framework, the central bank aims to encourage financial innovation while maximizing consumer protection and maintaining financial system stability. This regulatory system neither overly restricts the development of stablecoins nor allows unchecked growth but ensures that only stablecoin products meeting high standards enter the market, providing Canadians with innovative yet secure financial services.