desire to learn about cbdcs and their implications at this stage, central bank interest in these instruments has been kindled by a combination of factors. one of the most important, particularly among some advanced economies, is the protracted decline in the use of cash and the consequent need to adapt to this situation. 5 in addition, the possibility that privatelyprovided electronic means of payment take place in a context of poor competition, has in some cases stimulated central banks ’ interest in cbdcs. further to the above, a number of other possible advantages of cbdcs have been identified. the potential to enhance the safety of the payments system through a back - up given mounting operational risks in some segments, or its cost effectiveness, by saving on the distribution of cash, are included among them. in other instances, particularly amongst emerging market and in what follows, these remarks will concentrate on the case of general - purpose cbdcs, with use aimed primarily at retail operations by the public at large. while restricted - access cbdcs intended for wholesale payment and settlement transactions are also being explored, it should be noted that they have yet to be proven as a superior alternative to existing technologies and infrastructures. also worth mentioning is the case of ecuador, whose cbdc was issued between 2015 and 2018, although with muted success due to low acceptance rates from users in a highly dollarized economy. see khiaonarong, t. and d. humphrey ( 2019 ) : “ cash use across countries and the demand for central bank digital currency ”, imf working paper no. 19 / 46, march. developing economies, cbdcs are seen as a means to ameliorate outstanding gaps in financial inclusion of important segments of their populations. moreover, depending on their specific design, such as the level of transaction traceability ( or, conversely, anonymity ), cbdcs could also help counter the proliferation of illegal activities. notwithstanding the appeal that cbdcs may gather on the basis of these and other favorable attributes, important negative implications must be acknowledged as well. in general, these relate to the potential effects on the role that central banks play in a wide array of activities, some of them closely related to their core functions in the economy. in particular, the issuance of cbdcs could lead these institutions to operate directly in the intermediation of financial resources with the public. naturally, such abrupt deviations from the traditional role of central banks carry important risks

intermediation persist, and thus affect the conduct of monetary policy going forward? these are key questions that we at the bank of canada need to think about. and it may be some time before we have definitive answers. the potential impact on the canadian economy finally, the more immediate question is : what are the implications of the turbulence in money markets for canada's economy? as the bank noted in its interest rate announcement earlier this month, the near - term economic prospects for the united states are weaker than earlier expected, as events in financial markets will likely exacerbate the adjustment in the u. s. housing sector, making it more pronounced and more protracted. this implies weaker u. s. demand for canadian exports. however, economic growth in canada in the first half of this year turned out to be stronger than we had projected, and near - term prospects for economic growth outside north america continue to be very favourable. and so at our last fixed announcement date, we said that the canadian economy now appears to be operating further above its production potential than we had estimated at the time of our july monetary policy report update ( mpru ). domestic demand remains robust, buoyed by our continued strong labour market, rising wages, and higher - than - expected increases in housing sales and prices. but as i mentioned, the turbulence in financial markets has meant some tightening of credit conditions for canadian borrowers. this should temper the growth of domestic demand, although the extent of this effect is difficult to assess. against this background of a likely weaker track for exports and tighter credit conditions, along with signs of stronger domestic demand, we judged that the current level of our target for the overnight interest rate – 4 1 / 2 per cent – is appropriate. however, there are significant upside and downside risks to the outlook for inflation. on the upside, there is a possibility that household demand in canada could be stronger than anticipated, while on the downside, the ongoing adjustment in the u. s. housing sector could be more severe and spill over to the u. s. economy more broadly. in recent days, the canadian dollar has moved sharply above the trading range assumed in the july mpru, and we need to look at the causes of this strengthening, should it persist. and, as always, we need to assess the effect of movements in the exchange rate on the balance of aggregate demand and supply in the canadian economy. in addition, as i noted, there is uncertainty about the