Top bureaucrats investigated cryptocurrencies after Pierre Poilievre’s comments

Conservative Party of Canada leadership candidate Pierre Poilievre and his wife Anaida greet supporters during a campaign rally in Ottawa on March 31.Dave Chan/The Balloon and the Mail

Top federal bureaucrats examined whether cryptocurrencies protect against inflation shortly after opposition leader pierre polièvre he made the claim as a candidate in the Conservative leadership race, according to an internal government document.

The Privy Council Office, whose function is to provide impartial advice to Prime Minister and cabinet, prepared a briefing note on the viability of digital currencies for the head of the public service weeks after Poilievre’s comments in late March.

The briefing note, obtained by The Canadian Press via an access to information request, says that “in light of inflationary pressures, some proponents have touted the ability of crypto assets like bitcoin and ethereum to ‘decentralize’ the economy.” Canadian, providing a substitute for the national currency.”

But CRYPTOCURRENCIES they have provided no protection against inflation and serve as poor substitutes for the Canadian dollar for everyday transactions, says the document, which was delivered to the clerk of the Privy Council in early May.

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The document, which was lightly redacted by disclosure officials, says the asset price volatility has been “extremely volatile.” That limits its use as “a store of value, a key feature of a well-performing currency,” she says.

“Crypto assets have also not been hedged against inflation as most usage is speculative and price behavior is consistent with that of risk assets.”

A spokesperson for the Office of the Privy Council said the briefing note was prepared to provide the secretary with general information about crypto assets, “including information as to whether they have offered inflation protection.”

In late March, Poilievre suggested during a campaign event that digital currencies could help Canadians “opt out of inflation” because they are not influenced by central banks.

Speaking at a shawarma shop in London, Ontario, which accepts bitcoin as payment, Poilievre vowed to make the country more crypto friendly.

But over the summer, bitcoin’s value plummeted, losing more than half its value compared to the start of the year, a fate similar to that of other digital currencies.

The briefing note also looked at whether monetary stimulus is primarily responsible for high inflation and rising prices for goods and services, a claim it says is championed by “crypto asset advocates.”

Monetary stimulus is “just one factor among many that have contributed to the current episode of higher inflation,” the document says. Other factors include supply chain issues related to the pandemic and the Russian invasion of Ukraine.

The document says that the Bank of Canada’s stimulus helped accelerate the country’s economic recovery.

Poilievre has been a strong critic of the central bank and a proponent of the view that the stimulus caused higher inflation. He promised during the leadership campaign that if he is elected prime minister, he will fire the bank’s governor, Tiff Macklem.

Since becoming leader on September 10, Poilievre has said little on the subject of cryptocurrencies. His office did not immediately respond to a request for comment Wednesday.

Conservative MP Michelle Rempel Garner was expected to introduce a private member’s bill to develop a plan to grow crypto on the first day the House of Commons reconvened, but the bill was delayed.

In a statement, Rempel Garner’s aide said scheduling conflicts meant MPs had agreed to change the time of debate for three private members’ bills.

Liberals have seized on Poilievre’s support for crypto as a line of attack on social media and in the House of Commons since his return from summer break.

“Telling people they can opt out of inflation by investing their savings in volatile cryptocurrencies is not responsible leadership,” Prime Minister Justin Trudeau said earlier this month. “By the way, anyone who followed that advice would have seen his life savings destroyed.”

The Privy Council briefing note says that while cryptocurrencies have become more popular, “there is no clear expectation” among regulators, central banks and the financial sector that cryptocurrencies will be adopted into the mainstream as a substitute for cryptocurrencies. traditional coins.

If cryptocurrencies were to stabilize and become more widely adopted, monetary policy could become less effective, leading to longer economic downturns, he says.

Senator Tony Dean, who previously led Ontario’s public service, said it’s routine for public servants to prepare briefing notes on a variety of topics, and sometimes they are prepared proactively, without request from above.

“Then it’s available in case that problem or that opportunity becomes of interest (to) the government,” Dean said.

Dean said Poilievre’s “significant” and “unusual” comments could have prompted the public service to investigate the cryptocurrency.

“I’m not surprised that a note is generated on an issue like that,” he said. “It’s kind of a novel. It is controversial. It’s done by one of the contenders in a campaign, and that person can talk a little bit more about it and update it.”

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