The Privy Council Office considered cryptocurrencies to deal with inflation
The value of cryptocurrencies is volatile, says a briefing note submitted to the Privy Council Office. In particular, bitcoin has lost more than half of its value compared to the start of the year.
Senior federal officials examined whether cryptocurrencies protect against inflation shortly after Opposition Leader Pierre Poilievre made the comment as a Conservative leadership candidate.
According to internal federal government documents, the Privy Council Office prepared a briefing note on the viability of digital currencies for the head of the public service weeks after Mr. Poilievre's comments in late March. The role of the Privy Council Office is to provide non-partisan advice to the Prime Minister and Cabinet.
The briefing note, obtained by The Canadian Press through a freedom of information request, says that in light of inflationary pressures, some supporters have been touting the ability of cryptoassets like bitcoin and ethereum to "decentralize" the Canadian economy, by providing a substitute for the national currency.
But cryptocurrencies have not provided 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.
The document, which was only lightly redacted by FOI officials, says 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.
< p>“Crypto-assets have also not been hedged against inflation, with the majority of their use being speculative and with price behavior consistent with that of risky assets.
— Briefing note prepared for the Privy Council Office
A spokesperson for the Privy Council Office said the briefing note was prepared to provide the Registrar with general information about crypto-assets, including information indicating 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 influenced by central banks. /p>
He had made the announcement to a shawarma business in London, Ontario, which accepts bitcoins as payment. He promised then to make Canada more open to cryptocurrencies.
But over the summer bitcoin's value plummeted and he lost more than half of its value relative to the start of the year – a fate similar to that of other digital currencies.
The briefing also examined whether monetary stimulus is primarily responsible for high inflation and rising prices for goods and services, a claim it argues 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. Supply chain issues related to the pandemic and Russia's invasion of Ukraine are also among these factors.
The document states that the Bank of Canada's stimulus measures have helped accelerate the country's economic recovery.
Pierre Poilievre is an outspoken critic of central banking and a proponent of the idea that the stimulus caused higher inflation. He promised during the leadership campaign that if elected Prime Minister, he would fire Bank Governor Tiff Macklem.
Since he became chief on September 10, Mr. Poilievre said little about the subject of cryptocurrencies. His office did not respond to a request for an interview from The Canadian Press on Wednesday.
Conservative MP Michelle Rempel Garner was to introduce a bill to x27;private member's initiative to develop a cryptocurrency growth plan on the first day of the House of Commons resumption, but the bill was delayed.
The Liberals used the about cryptocurrencies to attack the Conservative leader.
Telling people that they can get out of inflation by investing their savings in volatile cryptocurrencies doesn' is not responsible leadership, Prime Minister Justin Trudeau lamented earlier this month. By the way, anyone who followed this advice would have seen their savings destroyed.