The Past Speaks

The Royal Canadian Mint is launching a new electronic payment system called MintChip.

The impression I get is that this is a near field system for small payments (e.g., grabbing a quick coffee from Starbucks). It is fascinating that the consortium of banks that runs Interac isn’t complaining about a government agency introducing a computing payment system. Private companies normally hate it when they have to compete with a government agency that doesn’t have to make a profit, especially one that enjoys the benefits of seniorage (i.e., the right to whip up additional money when needed).

In 2011, a report produced by the Task Force for Payments System Review, a government-mandated review body, highlighted the need for payment reform in Canada. Some 27 EU countries and the BRIC region were significantly outpacing Canada’s transition to digital payments, the review body said. “Even Peru and Romania” were ahead of the country, it said.

That seems to be true, at least in my experience. The UK is far more of a cashless society than Canada.  Canada used to be leader in this field but it is falling behind. (One of the other things I dislike about Canada is that they charge you a fee for withdrawing money from ATMs owned by other Canadian banks).

Needless to say, Jon Matonis, a columnist at Forbes magazine in the United States, hates the idea of a government getting into the business of payment systems. He seems to regard  MintChip as almost as bad as Canada’s system of evil socialized medicine. Conflating the goals of Bitcoin with those of all electronic payment systems, Matonis writes that: “The point of digital currency, and especially free-market digital currency, is to broaden the avenues for issuance and adoption of alternative nonpolitical monetary units.”

The fact the Harper government is allowing the Royal Canadian Mint to compete with private companies in this way is a reminder that Canada’s Conservatives are left-wing by US standards.

P.S. You can read about the history of the Royal Canadian Mint here. It was established  in Ottawa in 1908, as a branch of Britain’s Royal Mint. It officially  became the Royal Canadian Mint in 1931, once its assets were transferred by the British to the Government  of Canada.  The Mint became a Crown Corporation in 1969