OTTAWA, Nov 14 — Bank of Canada Senior Deputy Governor Carolyn Wilkins said the central bank is closely monitoring developments in digital money such as bitcoin.

The bank views bitcoin more as an investment product than a currency, and in general the use of digital currencies isn’t widespread enough to pose a risk to the financial system, Wilkins said.

Canada’s central bank has boosted its research into digital currencies amid the growing use of bitcoin to exchange goods and services. The Bank of Canada is responsible for the production and security of paper money.

“E-money is not big enough to pose material risk to financial stability in Canada at this time,” Wilkins said in a speech today at Wilfrid Laurier University in Waterloo, Ontario. She didn’t discuss the central bank’s one per cent policy interest rate in the speech or when responding afterwards to audience questions. “That said, money and payments technology is progressing in leaps and bounds, and so the Bank of Canada is watching developments closely.”

Using so-called cryptocurrencies carries risks including theft, fraud and the potential for money laundering, Wilkins said. If digital money were to gain widespread acceptance, it would also create issues for the central bank, particularly for cryptocurrencies.

That’s because transactions wouldn’t be denominated in Canadian dollars, Wilkins said.

“This would reduce the bank’s ability to influence macroeconomic activity through Canadian interest rates,” Wilkins said. “Let me be clear, we are nowhere near this point today but if we were, it would be even more important to determine whether issuing e-money is a role that should be done by the central bank.” — Bloomberg