New Zealand’s Reserve Bank consulting public on a potential CBDC

The Reserve Bank of New Zealand says a central bank digital currency might be a “solution” to the ongoing reduction in the use of cash and that it will look more closely at the use of cryptocurrencies.

The bank will open up public consultations regarding a CBDC and the emergence of new digital forms of money including stablecoins.

In a July 7 announcement, the Reserve Bank revealed it will be releasing a set of “money and cash issues papers for feedback from August to November,” which build upon the “Future of Cash” consultations from 2019.

The bank will “introduce and seek feedback” on crypto-focused papers that will look at the potential for a CBDC “to work alongside cash as government-backed money,” along with unspecified issues that arise from innovations in money and payment tech, including cryptocurrencies such as Bitcoin and stablecoins.

NZ’s Reserve Bank appears to be open-minded towards the deployment of a CBDC, but it has emphasized that a measured and cautious approach is required.

Assistant Governor Christian Hawkesby said in October 2020 that the bank had “no imminent plans” to deploy a CBDC, noting that “to issue currency that meets the needs of the public, we must take a new and holistic approach. We acknowledge there is much work to be done.”

In the latest CBDC related announcement, Hawkesby notes that:

“The potential for a Central Bank Digital Currency to help address some of the downsides of reducing physical cash use and services is something we want to explore for New Zealand.”

“A CBDC, similar to digital cash, might well be part of the solution, but we need to test our assessment of the issues and proposed…

Read More