Thursday, 15 November 2018

Credit Card Fraud Prevention and Awareness

Are you concerned about your credit score card or debit card is stolen? Well, you're not alone, its estimated that 51 % of users in the US and 57 % in Canada are worried about their credit score and debit cards being stolen. 

Credit card fraud is a constant worry and with more service offered by the bank, for different usage of there cards as they're the major source of paying for services and items. It offers the criminals greater probabilities to get our data from our cards.

Credit card fraud is not new when organizations
appear to be getting ahead on the path to stop the criminals, and then, the crooks come up with a brand new method it's a never-finishing problem. Credit card skimming is simply one of the issues, that is where they take the statistics from the magnetic strip and transfer it on to every other card. 

The companies try hard to combat back, they've hit lower back with the chip & pin card, which appears to be lowering fraud, however, give it time no question the criminals will find a way around that.

There are approaches to help yourself with credit and debt card fraud, beneath are a few beneficial recommendations in retaining the criminals at bay.

1. Never let your credit or debt card out of your sight.
2. Never maintain your Pin together with your card.
3. Don't supply your Pin out to everyone.
4. When taking flight money from an ATM machine ensure no one can see your Pin
5. Check your financial institution statements very carefully for any issues, contact your bank immediately if any arise.
6. Paying for goods with your card, just verify if the machine has anything new or different from the ordinary before entering your Pin.
7. Keep checkbook and your credit cards separate at all times.
8. Report your lost or stolen cards right away

The pointers above will help you fight debit and credit card fraud, however, you have to be vigilant at all times. As I stated earlier with more people buying goods and services with there debit and credit cards, it gives the criminals so many opportunities to get your information. 

With online purchasing turning into very popular quite a few of us fear about purchasing items over the internet, credit card businesses are looking to place our minds at rest. 

Credit and debit cards are right here to stay so we could wish that the credit score card companies, can rid us of credit card fraud, however, I am afraid its big business costing us millions every year and it will no go away.

Globally credit card fraud costs card issuers billions of dollars a year in fraudulent use. Some of this loss is handed back to outlets who failed to comply with the normal processing method for the card. Another part of the loss is insured. 

Nonetheless, as a cardholder, you are potentially responsible for any fraudulent use of your credit card. It is, consequently, imperative you make yourself privy to what the present day fraud scams are and how you can assist the battle of credit score card fraud prevention.

In order to increase the security of each cardholder, the issuer does use certain technological advances together to help in any credit card fraud. In this regard, the following are currently popular with card issuers:

* identification pics: where your image is proven at the front of the cardboard

* fingerprinting: in which a facsimile of your fingerprint is shown at the opposite of your card;

* chip and Pin systems: where the card has an encrypted chip containing information about the cardholder and a PIN that ensures the cardholder is the rightful owner. 

Essentially the chip includes the identical facts that used to be contained inside the magnetic strip at the opposite of the card, but in a chip format, it's believed to be far more difficult to replicate.

In conclusion :

Although every one of those systems isn't any a foolproof credit card fraud prevention approach, with credit card fraud costing increasingly more every year, you could wager that issuers are going to always be on the lookout for new technologies that will improve their security system. 

So be aware of the state-of-the-art credit card fraud preventions methods and help yourself in combat this developing hassle.

Sylvain Richard

Please note: I am not a financial advisor or bank employee, this above text is solely written from my experience in the hope that it could help a blog reader.

Thursday, 25 October 2018

Common Mistakes of Estate Planning

Estate Planning can be a phrase that is encountered by many citizens especially the elderly. 

What is Estate Planning? 
What blessings does it provide to humans?

Estate Planning is thinking about options and goals to prepare for matters which can occur to a person such as premature death, so Estate Planning is preparing the document to help those that are special to him/her.

It could be essential to become aware of the real definition of the term “estate” earlier than someone can undoubtedly carry out property planning. Estate means all of the properties and assets that someone owns or has control of. This is regardless of whether or not if the property is only named after him or is in managed in a partnership. This may consist of actual houses, money owed, bonds and shares, coins, buildings and institutions, rings, collections, all types of groups and even retirement advantages.

Typically, folks who really need to have a property plan are parents who have minor youngsters, human beings who've valuable houses and have sentimental values for them.

While someone is alive, it's critical to prepare a property plan and at the same time put into effect it. This is the appropriate time for someone to prepare with a settlement. There may be demanding situations that would occur if an estate plan is not implemented while someone is not already disabled. Others may also judge the lack of capacity and the person may be vulnerable to fraud, abuse, and coercion.

Estate Plans may encompass wills, the strength of attorney for health care, dwelling wills, dwelling trusts, and restrained partnerships. When writing down a will, it's essential to make use of a legal professional. Lawyers are the best certified who exercise these fields.  

Estate Planning involves touchy decisions. It is critical that before someone will enter into property planning, he must already have a strong understanding of the method so that matters will not be complicated for those who will be left behind.

Even though making plans your property isn't an exciting task it's essential so that you can efficaciously and successfully switch all your property to those who you leave behind. With a careful plan, your heirs can avoid having to pay estate taxes and federal taxes to your belongings. A nicely planned estate avoids confusion for your family.

Still, with all the benefits of estate planning, many humans make a superb mistake inside the process. The most common mistake when it comes to estate planning isn't always getting round to doing it in any respect. Make sure that you take the time to devise at least the financial part of your property so you go away your loved ones behind with some amount of security. The following seven mistakes often placed families into top-notch trouble after a cherished ones passing.

1. Don't fall into the trap of wondering that property
making plans is only for the rich. This is entirely fake as planning your property is essential for absolutely everyone who has any amount of property to depart behind. Many people don't realize that their property is as massive as it clearly is, especially after they fail to consider the belongings from their domestic.

2. Remember to update your will and to review it at a minimum once each two years. Factors that could change facts about your beneficiaries include deaths, divorce, delivery, and adoption. As your circle of relatives structure modifications so does the alternative to your property and who you want to go away them to.

3. Don't count on that taxes paid in your assets are set in stone. Talk for your financial planner about approaches that your beneficiaries can avoid paying taxes in your assets. There are numerous techniques for tax planning so you can reduce taxes or keep away from them altogether.

4. All of your monetary papers should be so as so that its clean for someone to find them. Make sure that certainly one of your loved ones has facts on wherein to find the papers vital for making plans after your loss of life.

5. Don't go away the entirety in your companion. When you leave all your belongings to your partner you are in reality sacrificing their part of the gain. You`ll get a property tax credit score, however, will forfeit part of this in case your spouse is your beneficiary.

6. Ensure that what you leave to your children are adequately planned for. Many people take time identifying what to do with their belongings and overlook that they need to hire guardianship for their children. There is much information to take into consideration concerning guardianship.

7. If you don't have a monetary guide, get one. If you need help deciding on the right monetary consultant, get the Financial Advisor Report.

The above errors are common while people are planning their estate. Take the time to plan before something happens to you, even though you suspect that you have years before it will become an issue.

In conclusion :

In my opinion, the key to successful property making plans is being prepared.

Sylvain Richard

Saturday, 13 October 2018

Finding a car insurance (And how to save money in the process)

Finding a car insurance

One of the best things to do before looking for a car insurance estimate is to see exactly what the state requirements are as far as what the necessary minimum coverage is in order to have adequate coverage. This is something that might be better to do without the assistance of an insurance agency if possible because their job is to sell insurance and they make more money with the more coverage they are able to sell.

Most of the time, a car insurance estimate will include collision, liability and comprehensive coverage on a vehicle. Most households have two or more vehicles and every car should be included when seeking out a car insurance estimate. There are a few things that can be done to make getting a car insurance estimate easier and more accurate, especially when dealing with more than one car insurance company.

Hunting around for a car insurance estimate is not something most people enjoy doing. It is one of the worst chores that is required in order to have a vehicle on the road, but it is worth seeking out the most competitive car insurance estimate available. Although getting a car insurance estimate from a number of companies isn't a desirable task; many people spend far more than they absolutely have to each year on their auto insurance because they simply haven't taken the time to compare rates and policies with other auto insurance companies. It would be hard to find someone who would walk into an appliance store and decide to spend $200.00 more
on a washer that offers the same exact quality and features as the one next to it that costs far less. It doesn't make too much sense to do the same thing with car insurance.

In order to spend less time on the phone when looking for a car insurance estimate, it is a good idea to have a number of items handy including a drivers license, vehicle identification numbers, make, model and year of each car and even the name and contact information for the company that is financing all vehicles if applicable. There are also a number of factors that can be taken into consideration when seeking a car insurance estimate that may mean additional savings per year. Features on each auto including airbags, auto alarms, anti-lock brakes, and other things may mean discounts on auto insurance. Some insurance companies will even offer discounts for having more than one policy with their company as well as insuring multiple cars through with their coverage. Additional discounts may be found through other things like accident-free driving record, defensive driving course incentives, and other discounts.

Other circumstances may cost a driver more with certain companies when looking for a car insurance estimate. Men under the age of 25, single drivers, younger drivers under the age of 21, the number of miles driven per day and even the kind of car that is driven can cost a person more money on car insurance when shopping around. The best part about this is that not one car insurance will probably charge the same amount of money for the same coverage so shopping around will prove that there are better choices available.

Save money on your auto insurance: Money-saving car insurance tips

Are you paying too much for your auto insurance? If you believe you are paying too much for your current auto insurance coverage then the following suggestions may help you save money:

1. Shop around

Sure, you've read this tip everywhere but its true. Only by shopping around for auto insurance coverage and getting quotes on premiums from several insurance companies will you be able to know for certain you are getting your car insurance coverage at the best available rate.

When shopping for your auto insurance policy, remember to compare more than insurance rates. Ask about how insurance claims are approved and processed, and how quickly they're paid. Look into each insurer's financial stability (there are independent rating services that can help you with this.) Remember, during times of stress like after an accident you will be dealing with the insurance company and you'll want to make sure you'll be helped when you need it most.

2. Select a higher insurance deductible

When you file a claim, a deductible is an amount you pay first before your insurer pays the remaining balance. Often people select lower deductibles, so when they have to submit a claim, their out-of-pocket expenses are minimal. But the truth is the higher your collision and comprehensive deductibles the lower your auto insurance premium. The savings by increasing your deductible to say $1,000 from $250 are significant you can save hundreds of dollars off your insurance premium.

Of course, the flipside is that if you should have to submit an insurance claim you are responsible for paying the deductible. So select the
maximum deductible you can afford to pay the higher the better because the difference in your car insurance premiums will mean more cash in your pocket.

3. Remove or reduce coverage on older vehicles

If your car is getting up there in age, you may want to think about dropping the collision or comprehensive coverage (or both) on your policy. You need to think about this one though – it’s not always a clear-cut decision. You need to weigh the cost of the two coverages with the value of your car and your chosen deductibles. For example, if you had a 10-year-old car that's worth about $1000, and your deductible was $1000, the coverage is not actually going to help you.

4. Ask about discounts

Most insurance companies offer discounts. While the availability of discounts will vary depending on your insurer, where you live and whether you meet eligibility, make sure to ask if there are any discounts you can take advantage of. The following is a list of a few of the more common discounts (if available in your state, each insurer will have different eligibility requirements):

Multi-vehicle discount – available if you insure multiple vehicles with the same insurer

Multi-line discount – available if you insure your home and auto with the same insurer

Good driver discount – if you have not had an accident or ticket in a long time

Good student discount – if you're a student with good grades, usually about a B average

Safe driver discount – if you've taken and passed an accredited driver safety course

Anti-theft discount – if your vehicle has certain anti-theft devices installed

Safe vehicle discount – if your vehicle has certain extra safety features

Retiree discount – if you've reached a certain age, usually 50 or 55

Low mileage discount – if your vehicle is not driven often

Occupational discount – if you work in a certain field or hold a certain degree

Auto club discount – if you are a member of an auto club, like AAA

Association discount – if you belong to certain associations, like your alma mater

Away-at-school discount if your child is attending school out of town

5. Choose a car that costs less to insure

If you're purchasing a new car and have narrowed it down to two or three options, compare the auto insurance rates of each to see if there is a notable difference in the cost to insure. Remember, insurance rates are more for vehicles with high theft rates and repair costs. If there is a significant difference in cost to insure your first choice car, you may have to reconsider.

6. Drive safely

OK, this one is obvious but true. Drivers with no accidents, tickets or insurance claim almost always pay less for their auto insurance coverage. Your driving record is an influential factor in determining your insurance rate. Tickets and at-fault accidents affect your insurance rates for years. With a less than a perfect driving record, you can find yourself paying a lot of extra insurance premium over the years.

Sylvain Richard

Sunday, 7 October 2018

Decrypting “Crypto”

Source : Bank of Canada
Source : original article

Timothy Lane - Deputy Governor
Haskayne School of Business - University of Calgary
Calgary, Alberta
October 1, 2018


Good afternoon.

Some of you here today may have purchased bitcoins or one of the other cryptocurrencies or products that have launched in recent years. I’m not here to give you investment advice about them. Rather, I want to share with you our current thinking about these virtual products.

Investors worldwide have taken an increasing stake in them over the past few years, even as their market values have fluctuated widely. Around 2,000 crypto products are now available, with dozens more launching every month.1 Trading volumes have grown almost 100-fold in just the past two years. Media interest in them has inflated at a similar pace, often including a thick layer of hype. The recent collapse in the market valuations of many cryptoassets—almost 40 per cent of those originally launched are now worthless—seems to have done little to dampen enthusiasm.2

Some investors see these products as potentially world-changing; others as an example of “popular delusions and the madness of crowds.”3 Possibly both are right. New financial or technological innovations often ignite market bubbles as users race to discover their most popular and profitable applications. Think of the “dot-com” bubble of the late 1990s, when prices of many Internet-related stocks shot into the stratosphere. While that period ended in tears for many investors, a handful of new companies that rose at that time, such as Google and Amazon, have brought about profound changes in the way we work, play, shop and live.

The Bank of Canada is not responsible for regulating these crypto products. Indeed, the term “cryptocurrencies” is a misnomer. We prefer to call them “cryptoassets” because, as I will discuss in a moment, they don’t do a good job of performing the basic functions of money. But as they evolve, they may touch on the Bank of Canada’s core functions: monetary policy, financial stability, payments, and currency.

In my remarks today, I’ll put these crypto developments in context, discuss the need for globally harmonized regulations and highlight the Bank’s research and responses to public interest in cryptoassets.

Currency and trust

Bitcoin and many similar products were created in the hope that they would become the money of the future. How well do they stack up against the money of the past and present? This includes bank notes as well as bank deposits that can be accessed with a debit card or—for your parents’ generation—by cheque.4

Let’s consider bank notes. One of our core functions at the Bank of Canada is to provide bank notes that Canadians can use with confidence. This is perhaps the most visible aspect of our work.

We all take for granted that if you want to buy a coffee you can pay with cash. The coffee shop deposits the cash in the bank and uses the funds to pay for beans and baristas’ wages. The cash is universally accepted by all parties. Why is that?

First, bank notes are a simple but effective technology for keeping track of who is paying how much to whom. Because a banknote is a physical thing, you can’t spend the same note twice. Many Canadians still prefer the simplicity of cash for small transactions. And cash works even when systems are down.

Second, bank notes offer privacy for your transactions. You can use them without giving anyone your personal or banking information. Using cash avoids the risk of being hacked or having your card compromised. Privacy is a controversial attribute given that bank notes are a preferred medium of exchange for all kinds of illicit transactions. But for entirely legitimate reasons, most people place a high value on the privacy of their financial transactions.

Third, we incorporate into our bank notes the most advanced security features to ensure they are difficult to fake and easy to authenticate. We also work closely with law-enforcement agencies to deter counterfeiting.

Fourth, the acceptance of money is a matter of social convention. People accept cash as a means of payment because they know that others will do the same. This convention is enshrined in law: Canadians understand that we and the Royal Canadian Mint have a monopoly on the issuance of what’s called legal tender, the official money used in Canada.

Finally, bank notes are denominated in dollars that offer stable purchasing power. The Bank of Canada helps preserve their value by keeping inflation low, stable and predictable. Since the early 1990s, when we adopted our inflation-targeting monetary policy framework, we have maintained inflation close to the midpoint of our 1 to 3 per cent target range. This has allowed Canadians to make spending and investment decisions with the confidence that the future purchasing power of their money is secure and predictable.

After a quarter century of successful inflation control in Canada, overall price stability has become the new norm. But some of us can recall the impact on households of spiralling inflation during the 1980s, when the interest rate on mortgages hit 20 per cent. Even today, while many countries have tamed inflation, some like Venezuela are coping with hyperinflation that is causing widespread hunger and hardship.

The trust and confidence that Canadians have in our notes and in their purchasing power is based on our track record and reputation.

Cryptoassets: what’s their story?
So where do cryptoassets fit into this picture?

Their proponents argue that the great benefit of Bitcoin and other forms of crypto cash is that they
eliminate the need for public institutions like a central bank or large commercial banks. People using this system, they argue, don’t have to trust an individual or institution. That’s true, but they do have to trust the technology.

Cryptoassets are so called because they use cryptography to validate transactions and prevent fraud. Records are kept through blockchain technology—a digital ledger stored on thousands of computers worldwide that keeps track of every coin or token issued. Anybody trying to fraudulently use their crypto cash multiple times will likely be caught by the validation process on all these computers.

The use of encryption gives cryptoassets a similar level of privacy as bank notes. And they are as light and borderless as air. You can transfer them across town or across continents much more easily than you can a suitcase filled with $100 bills.

A key feature of most cryptoassets is that their value is not tied to the dollar or other national currencies but has its own unit.

Blockchain provides a mechanism for creating new tokens that makes it difficult to generate more in any way other than as prescribed by its underlying software. To create new units of value, cryptoassets must typically be “mined” by running energy-intensive computer computations. This is, in effect, a form of pre-programmed monetary policy: the purchasing power of the crypto tokens is determined by supply and demand, where the supply is limited by the enabling software.5 This pre-programmed mechanism for creating cryptoassets was originally a key selling point. Those who believed that central banks could not be trusted to maintain the value of money were attracted by the idea of a money that is untouched by any public institution or individual.

Ironically, this very mechanism has turned out to be its fundamental flaw. When the limited supply of tokens meets large flows of demand from enthusiasts, the result—as we have seen—is wild fluctuations in the value of cryptoassets. These fluctuations have drawn in even more speculative money, which has further amplified the price movements. Indeed, many Canadians who purchased bitcoins in 2017 reported that they did so for “investment” purposes—and that really means speculation.6

The implication of these price movements is that the purchasing power of cryptoassets is far less stable than that of almost any sovereign money. The value of a bitcoin in US dollars topped $20,000 in the last year and is now down to around $6,000. Such wide price movements make it unlikely that the current crop of cryptoassets would ever be used as money for ordinary purposes when there is a stable national currency.

Cryptoassets are also very expensive to use. Transaction costs were high in 2017—as much as $55 per transaction—compared with almost zero for cash.7 These costs have come down since then, but if transaction volumes push the limits of the network again, costs will jump back up.

In short, the current crop of cryptoassets is not about to replace the Canadian dollar or other national currencies. They are products that may be largely of interest to three kinds of users:

investors, who should be fully aware of the risks they are taking;
residents of countries where there is no trustworthy national currency; and
those undertaking illicit transactions, including tax evasion, money laundering and terrorist financing, for which the property of pseudonymity makes them an ideal way to move funds.
The crypto ecosystem
So far, I have been talking about digital tokens launched with the ambition of becoming a form of currency. Now, many digital tokens are being created without any such ambition.

Every month, dozens of new crypto products are launched through initial coin offerings (ICOs). In an ICO, investors purchase a new digital token in exchange for cash or for other, more established cryptoassets. Some of these resemble the initial public offerings that private companies use to raise capital by offering their stock to the public for the first time. In this way, they are like crowdfunding—a means to raise equity capital without jumping through all the regulatory hoops needed to issue publicly traded securities. Other ICOs offer the purchaser the right to use services on a platform that has yet to be built—and are thus more like the economic equivalent of a gift card. In yet other cases, the promised benefits to the purchaser are more nebulous.

Those ICOs that function in a similar way as shares in a new company raise all the same issues as any other stock offering. Their value is based on the profits from some enterprise, so investors need to be able to verify that the enterprise actually exists and keep track of what it is doing with the funding it raises.

In practice, ICOs have not always met that standard. For example, failure to meet funding targets hasn’t always resulted in the return of money to investors. And in cases where funding targets were exceeded, it’s not always clear how ICOs are using the extra money.

Thus, while there are certainly advantages to a flexible, technologically advanced method of funding innovative enterprises, investors in ICOs need to be wary of fraud and misrepresentation.

Given the steady introduction of new types, crypto products are often hard to classify. Many will prove to be short-lived.

Yet it would be a mistake to dismiss all these innovations as fleeting fads. Some products may turn out to be smart and useful—by finding better, cheaper, more competitive ways of filling an actual need. If they do that, they could also challenge the existing business models of established financial institutions. For example, if the risks are properly managed, cryptoassets could potentially serve as a new funding tool, allowing small businesses to find the capital they need. Some also argue that cryptoassets could deliver financial services to segments of the population that are underserved by existing financial institutions.

Even if the products themselves ultimately fail, they advance the development of technologies that are likely to be useful for a range of other purposes. Cryptoassets spurred the development of distributed ledger technology (DLT), which may have many valuable applications. At the Bank of Canada, through our Project Jasper, we have been exploring the potential use of DLT to streamline the settlement of financial transactions and the associated back-office activities.8 This technology may have many other uses, such as registries for anything from land to commodities, trade finance and parolees in China.

Although cryptoassets themselves exist only in cyberspace, they connect with the real economy and the financial system at various junctions—comprising a kind of crypto ecosystem. One point of contact is the direct use of these products to pay for goods and services over the Internet. A second is ICOs.

Third, certain investment products in the mainstream financial system are linked in some way to the valuations of cryptoassets. These include derivatives contracts that have been launched on some commodity exchanges and exchange-traded funds.

A fourth important point of contact is crypto exchanges, where cryptoassets are traded for money or for other cryptoassets. Crypto exchanges have been set up in different ways, which makes them hard to classify. Some exchanges have an economic function similar to banks: they hold cryptoassets on behalf of their clients, so the client gives up direct control of the cryptoassets themselves and has a claim on the exchange.9 Other crypto exchanges function more like electronic trading platforms for cryptoassets.

The regulatory arena
The newness of crypto products and the fact that they claim to be delivering some of the same services provided by regulated financial institutions raises key questions. What risks could they pose? Should they be regulated? If so, how?

As I mentioned earlier, the Bank of Canada is not responsible for regulating crypto products. Nonetheless, we have been examining their potential impact on the stability of Canada’s financial system. We’ve also been participating in international research on them, through the Financial Stability Board (FSB), G20 and G7.

Regulators need to examine cryptoassets from a number of angles:

the potential risks to the stability of the financial system,
the integrity of markets and protection of investors, and
protection against abusive financial flows such as money laundering and terrorist financing.
The consensus of policy-makers is that crypto products do not yet pose financial stability risks.10 This is in part because, despite their rapid growth, crypto products have a relatively small footprint in the financial system. The market capitalization of all cryptoassets was recently estimated at $230 billion and the volume of trading in these products at about $15 billion annually. While these seem like big numbers, they are dwarfed by other global financial markets: global equity markets alone have a market capitalization of around $100 trillion. Moreover, crypto products are not deeply interconnected with the mainstream financial system. For example, there is little evidence that commercial banks are investing in cryptoassets or accepting them as collateral.

In this context, the immediate priorities are to address the other two issues I mentioned: investor protection and abusive financial flows. In these areas, the relevant regulators are working hard to adapt their frameworks to cover these new products.

But things are evolving rapidly. Cryptoassets are growing in size, complexity and interconnectedness. As the underlying technologies and the design of crypto products evolve, we need to be ready to reassess how they might affect financial stability. Some potential aspects include the integrity of payment systems, bank business models, and the exposures of financial institutions and infrastructures. The FSB and related bodies are monitoring this evolution closely.

Regulators also have to be forward-thinking about what kind of action may be required. That means putting in place a framework that is sufficiently adaptable so when new products emerge that potentially pose new risks, regulatory agencies will be ready.

Crypto products are already regulated in many countries at the national or regional level. But in many jurisdictions the regulatory framework is far from complete. Also, given that cryptoassets are global in scope and not confined by borders, an emerging problem is the gaps between regulatory regimes.

Different jurisdictions have adopted different regulatory approaches, depending on how they have defined these assets. When a new product is launched, is it classified as a payment instrument, a security, a commodity or none of the above? Should crypto exchanges be called banks, financial market infrastructures or something else? These classifications differ across jurisdictions and in some cases remain nebulous.

Beyond these differences in classification, the regulatory treatment of these assets differs. In China, the response has been to ban them. In Japan, authorities are creating a framework to manage the risks associated with their growth.

Such differences among regulations globally, together with the incompleteness of regulation in many jurisdictions, open room for promoters to engage in regulatory arbitrage, developing new products to exploit them. Regulators must decide how far they need to go in harmonizing their approaches with other countries. Differences in the regulatory treatment of these products for controlling money laundering and terrorist financing are a particularly pressing concern.

Such factors pose key challenges for regulatory agencies. Data and a consistent means of collecting them are required to assess emerging risks. And an agreed system is needed to classify new products by their attributes and economic functions.

At the same time, we need to avoid regulation that is so heavy-handed or cumbersome that it stifles innovation. New crypto products could deliver more of what the public wants and bring more competition and financial inclusion to the system. Developments in this space could spur the growth of technologies that have important positive spinoffs. These concerns must be carefully balanced.

The regulatory framework in Canada is still a work in progress, but a number of steps have been taken by the federal and provincial governments, which share jurisdiction in this area.

In 2014, the federal government amended Canada’s anti-money laundering legislation to include businesses dealing in cryptoassets. Regulations based on the legislation are now being finalized. The Canada Revenue Agency also published a note on the tax laws that apply to cryptoassets. And the Financial Consumer Agency of Canada has a useful backgrounder on the risks and tips for using cryptoassets.

At the provincial level, the Canadian Securities Administrators issued a staff notice in 2017 on crypto offerings, warning investors about issues such as volatility, transparency, valuation, custody and liquidity, as well as the use of unregulated cryptocurrency exchanges. The notice also offers guidance on the applicability of securities laws and what steps businesses should take if they are raising capital through ICOs.

Central bank digital currency
At the Bank of Canada, we are also considering the potential implications of these developments for our own core functions. In particular, we are assessing how we could respond if cryptoassets were to evolve in a way that undermines our ability to provide Canadians with a means of payment with stable purchasing power that they can use with confidence. This is related to our ability to implement effective monetary policy as well as to the security and finality of settlement we provide through our bank notes. While we do not have any doubts currently about our ability to fulfill our mandate, contingency planning is important: the changes driven by technology may be rapid.

In this context, one of our priorities is to explore under what conditions, if any, we might recommend to the government that we issue our own digital currency. At the same time, we are studying key design questions related to a central bank digital currency (CBDC), such as what form it might take and whether it would be anonymous like cash. As it turns out, the questions of “under what conditions” and “in what form” are closely intertwined.

The design of a CBDC has important implications for its risks and benefits. For example, some major reasons for caution about a central bank digital currency are concerns that it could become a vehicle for illicit transactions or that it could have significant negative implications for financial intermediation. Unless such risks could be managed through appropriate design, the Bank would not recommend issuing such a currency.

Ultimately, then, this exploration is going to require a unique combination of economics, technology and business strategy as well as thorough consultations with all stakeholders. We have assembled a multidisciplinary team to do this work and will provide more details as the research unfolds. We are also exchanging information with other central banks, notably the Swedish Riksbank, which is well along in examining CBDCs. The results of our work in this area are available on a special page on our website.11

It’s important that Canadians benefit from financial products and services that are better, cheaper and more flexible. At the same time, we will continue to keep a close eye on the risks associated with cryptoassets. We are working with our domestic and international partners to ensure they do not pose a risk to the Canadian or global financial system.

Canadians need universal access to means of payment that they can trust. As advances in technology open up new opportunities and transform the financial system, we at the Bank of Canada will continue to do what is needed to maintain that trust.

I would like to thank James Chapman and Scott Hendry for their help in preparing this speech.

Content Type(s): Press, Speeches
Topic(s): Cryptoassets, Cryptocurrencies, Financial stability
Related Information
October 1, 2018Haskayne School of Business - Speech (Webcasts)

Decrypting “Crypto” - Deputy Governor Timothy Lane of the Bank of Canada speaks before the Haskayne School of Business at the University of Calgary. (11:15 (Mountain Time), 13:15 (Eastern Time) approx.)

Content Type(s): Press, Webcasts
See [←]
There is now even a website,, that lists the failed cryptoassets and the reasons they collapsed. [←]
C. Mackay, Memoirs of Extraordinary Popular Delusions and the Madness of Crowds (London: Richard Bentley,1841). [←]
Credit cards are another popular method of payment in Canada, but they are not considered money because they do not store value. They only commit the card holder to pay later using another method. [←]
However, Bitcoin allows the possibility of “forking” or the creation of two separate versions of the blockchain and two different cryptoassets. This implies that Bitcoin’s claim to complete control of monetary growth is overstated. See J. Abadi and M. Brunnermeier, “Blockchain Economics,” August 25, 2018. [←]
See the results of the 2017 Bitcoin Omnibus Survey conducted by the Bank of Canada. [←]
See Bitcoin average transaction fee. [←]
See Could DLT underpin an entire wholesale payment system? [←]
In such cases the crypto exchange holds the only copy of the key to the client’s cryptoassets. The cryptoassets are thus accessible only to the exchange; the investor holds a claim on the exchange. [←]
See the recent FSB report and letter from the FSB Chair to G20 Finance Ministers and Central Bank Governors. [←]
See Digital Currencies and Fintech. [←]

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Friday, 14 September 2018

Bank of Canada

Bank of Canada calls for nominations for the 2019 Fellowship Program awards

               Media Relations
               Ottawa, Ontario
               September 10, 2018
               Click here for original article

The Bank of Canada is inviting Canadian universities to nominate exceptional academics for its 2019 Fellowship and Governor’s awards. Presented annually, these awards distinguish and support the work of academics who are making exemplary contributions to economic and financial research in Canada.

Because issues related to central banking extend beyond traditional monetary policy theory, the Fellowship Program is designed to foster research excellence in a broad range of fields related to the Bank’s core functions: monetary policy, financial system, currency and funds management. The program also supports collaboration between Bank staff and leading academics at Canadian post-secondary institutions.

There are two types of awards under the Fellowship Program:

The Fellowship Award provides financial support to leading academics who are widely recognized for their expertise and whose research contributes to the development of knowledge and research capabilities in areas important to the Bank’s core functions. This award provides annual funding of up to $90,000 for a term of up to five years, and recipients are professors in tenure or tenure-track positions at Canadian universities.

The Governor’s Award recognizes outstanding academics at a relatively early stage in their careers who are working at Canadian universities. This award provides annual funding of $30,000 for a term of up to two years to academics who have obtained a PhD within the past 10 years.

The deadline for nominations is Friday, November 9, 2018. For more information on the Program, award requirements and the nomination process, please visit the Bank’s website. A list of past recipients is available.

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