The Reserve Bank of New Zealand – Te Pūtea Matua is continuing its exploration of a central bank digital currency and is now consulting on the proposed design features.
Director of Money and Cash, Ian Woolford, says the bank is calling this ’digital cash’. “It would be a new type of money in addition to the banknotes and coins we have today, and the electronic money in your bank account.”
He says in a statement that digital cash would ensure that central bank money is available to all New Zealanders and able to be used digitally.
“It would also help enable a money and payments system that is innovative, competitive and contributes to the development of New Zealand’s digital economy.”
Woolford says this would be the first digital form of New Zealand currency backed by the government and available to the public.
“Physical cash in banknotes and coins would still be available, so people would have the option to use either digital or physical cash.
“You would likely need a digital wallet, payment card or phone app to access your digital cash. You wouldn’t need a commercial bank account to use it.”
…innovations in money and payments are challenging New Zealand’s monetary sovereignty…
He says that innovations in money and payments are “challenging New Zealand’s monetary sovereignty. Like cryptoassets, distributed ledgers, smart contracts, and digital currencies issued by global technology companies. New Zealand’s money must innovate to stay relevant and useful and ensure our monetary sovereignty”.
“There is also a huge opportunity for digital cash to support competition and innovation by enabling our powerful fintech sector.”
Woolford says that digital cash would be mainly used for payments by individuals and businesses, to pay online, instore, or even to pay a child’s pocket money in the same way people can use cash currently.
“You could use it to do new things like make an instant digital payment to anyone in New Zealand. Today, New Zealanders still cannot make instant payments electronically to other people, unless they are both with the same bank.
“It would also work via Bluetooth, so you could make payments without connecting to the internet. This would be useful in an emergency, or when the power is out.
…digital cash would be private, secure, and trusted…
“Digital cash would be private, secure, and trusted – the Reserve Bank will not control or see how you spend your money.”
He says that like physical cash, digital cash would be denominated in New Zealand dollars and issued by the Reserve Bank. It could be swapped 1:1 with physical cash, and other forms of NZD, like the electronic money in a bank account.
“We are planning for a future in New Zealand that has less cash, but not one that is cash-less. We are committed to continuing to make cash available in forms that New Zealanders want to use.”
Woolford says many New Zealanders are using physical cash less and finding it harder to access. The bank’s latest survey on cash use is out soon and shows cash use declined fast under Covid and is not increasing.
The Reserve Bank wants New Zealanders to tell it what they think before it designs how digital cash will work. What are the challenges, benefits, and concerns?
Consultation is open April 17 until July 26, 2024.
The banks says this is multi-stage exploration until around 2030 and there will be further opportunities for consultation. See rbnz.govt.nz/digitalcash.
