The Reserve Bank of New Zealand sees a central bank digital currency (CBDC) as a “solution” to the ongoing reduction in cash usage. The bank will open up public consultations regarding a CBDC and the new digital money like stablecoins.
In a July 7 statement, the Reserve Bank of New Zealand announced 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.
According to the statement, 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 central bank is seemingly open to the deployment of a CBDC, but it has pointed that a measured and cautious approach is needed.
Christian Hawkesby, an Assistant Governor said in October 2020 that the bank had “no imminent plans” to deploy a CBDC, claiming 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 announcement, Hawkesby stated 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 approach before developing any firm proposals.”
As he claimed, the future “will undoubtedly involve less cash.”
Hawkesby said that despite the declining amount of cash usage in New Zealand, it is still “widely valued because it ensures inclusion” and gives the citizens “autonomy and choice in the way they pay and save.” And he added that “personal and retail customers are struggling with the loss of cash and in-person banking services despite banks’ efforts to help them adapt.”
The Assistant Governor pointed that although digital payments are the preferred way for most New Zealanders, the bank’s “job is to ensure that these transitions work for all New Zealanders.”
“We also know that digital forms of payment are the preferred way of paying for the majority of us and that the future will undoubtedly involve less cash,” he claimed.
New Zealand’s central bank joins its counterparts in the world’s major economies in exploring the potential for a CBDC, with China leading the way. South Korea and Sweden both appear to have moved from exploration to testing in recent months.