Poilievre’s Cryptocurrency Inflation Comments Prompt Bureaucratic Research: Documents – National

According to an internal government document, senior federal officials were investigating whether cryptocurrencies protect against inflation not long after opposition leader Pierre Poilievre made the claim as a candidate in the Conservative leadership race.

The Privy Council Office, tasked with providing impartial advice to the prime minister and cabinet, prepared a briefing note on the viability of digital currencies for the head of the civil service weeks after Poilievre’s remarks in late March.

The information note, obtained through a request for information from The Canadian Press, reads: “Faced with inflationary pressures, some proponents have touted the ability of cryptoassets like Bitcoin and Ethereum to ‘decentralize’ Canada’s economy and provide a substitute for the national currency. “

But cryptocurrencies offer no protection against inflation and serve as a poor substitute for the Canadian dollar for everyday transactions, said the document, which was given to Privy Council officials in early May.

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The document, which was only lightly redacted by officials for access to information, says asset price instability has been “extremely volatile”. That limits their use as a “store of value, a key feature of a well-functioning currency,” it said.

“Crypto assets are also not hedged against inflation as most usage is speculative and pricing behavior is consistent with that of risky assets.”

A spokesman for the Privy Council office said the information note is ready to provide the case officer with background information on cryptoassets, “including information on whether they have offered protection against inflation.”

In late March, Poilievre had hinted during a campaign event that digital currencies could help Canadians “exit inflation” as they are not influenced by central banks.

Speaking at a Shawarma store in London, Ontario that accepts bitcoin as payment, Poilievre vowed to make the country more crypto-friendly.

But over the course of the summer, Bitcoin’s value plummeted, losing more than half its value compared to where it started the year – a similar fate to other digital currencies.

The briefing also examined whether monetary stimulus is primarily responsible for high inflation and rising prices of goods and services, a claim allegedly made by “crypto-asset advocates.”

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Monetary stimulus is “just one factor among many that have contributed to the current wave of inflation,” the document said. Other factors include pandemic-related supply chain issues and Russia’s invasion of Ukraine.

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

Poilievre was a vocal critic of the central bank and a supporter 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 Poilievre became a leader on September 10, he has said little on the subject of cryptocurrencies. His office did not immediately respond to a request for comment on Wednesday.

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

In a statement, Rempel Garner’s assistant said scheduling conflicts meant MPs agreed to postpone debate time for three private members’ bills.

The Liberals have used Poilievre’s support for the cryptocurrency as a line of attack on social media and in the House of Commons since returning from the 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 would have followed that advice would have had their life savings destroyed.”

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The Privy Council’s briefing note said that while cryptocurrencies have grown in popularity, there is “no clear expectation” among regulators, central banks and the financial sector that cryptocurrencies will be adopted mainstream as a replacement for traditional currencies.

As cryptocurrencies stabilize and become more widely adopted, monetary policy could become less effective, leading to longer-lasting economic downturns, they say.

Sen. Tony Dean, who used to lead Ontario’s civil service, said it’s routine for public officials to prepare briefing notes on a range of issues and these are sometimes prepared proactively, without a request from above.

“It will then be available should that issue or opportunity become of interest to the government,” Dean said.

Dean said Poilievre’s “significant” and “unusual” comments may have prompted public services to look into cryptocurrency.

“I’m not surprised that a note is being made on a topic like this,” he said. “It’s kind of a novel. It’s controversial. It’s created by one of the contenders in a campaign, and that person might be able to talk a little more about it and make it happen.

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