Reserve Bank of New Zealand Seeks Public Opinion on Central Bank Digital Currency
The central bank of New Zealand has lined up among monetary authorities exploring the question of issuing their own digital currencies. The financial regulator is now seeking feedback from the public about the need for a digital form of the national fiat while also promising to preserve cash.
New Zealand Central Bank Considers Risks and Benefits of CBDC
Reserve Bank of New Zealand (RBNZ) is now gathering input from the public on the potential use of a central bank digital currency (CBDC), Reuters reported following an announcement released by the bank on Thursday. Assuring that financial authorities are still working “to preserve cash and the cash system for those that need it,” RBNZ Assistant Governor Christian Hawkesby stated:
A Central Bank Digital Currency would see the features and benefits of cash enjoyed in the digital world, working alongside cash and private money held in commercial bank accounts.
The high-ranking official elaborated that a CBDC could benefit both individuals and businesses by facilitating the establishment of more efficient and integrated platforms. A digital New Zealand dollar could potentially help protect the country’s monetary sovereignty as well. Hawkesby, who is also the bank’s General Manager of Economics, Financial Markets and Banking, was quoted as saying:
As steward we want to ensure that our central bank money remains a stable value anchor for the monetary system and available as a fair and equal way to pay and save – so ensuring that New Zealanders have access to money in forms that suit them and their changing needs.
At the same time, the banker acknowledged that a digital currency would pose certain operational risks, including those of a cybersecurity nature, and impact the traditional financial sector. Hawkesby then emphasized that any decision on launching a CBDC would have to take these factors into careful consideration.
In a paper accompanying the statement, the Reserve Bank of New Zealand pointed to the declining use and acceptance of paper cash in the country, which could be another major motive to mint a national digital coin. The financial institution also highlighted innovations in private money such as the emergence of stablecoins.
Other central banks in the region are already cooperating on the CBDC front. In early September, reports came out that the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore, and the South African Reserve Bank are all preparing to test the use of state-issued digital currencies in international payments. The banks explained that the collaboration aims to develop shared platforms for cross-border transactions using different CBDCs.
The trials are led by the Bank for International Settlements (BIS) Innovation Hub with the goal to establish whether central bank digital currencies can simplify transactions and lower their costs. The Hub heads a similar project between China, Hong Kong, Thailand, and UAE, while it’s also cooperating with Bank of France and the Swiss National Bank to test wholesale digital currencies in cross-border settlements.
Central banking institutions in dozens of countries around the world are currently working to develop and launch CBDCs, with the People’s Bank of China arguably having the most advanced project. The U.S. Federal Reserve, Bank of Russia, and the European Central Bank are also progressing towards issuing their own digital currencies.
Do you think the Reserve Bank of New Zealand will eventually decide to issue a national digital currency? Share your expectations in the comments section below.
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