The Reserve Bank is seeking feedback on its proposed approach to the opportunities and challenges from new forms of private money such as cryptoassets, including stablecoins.
Ian Woolford, Director of Money and Cash, says in a statement that the bank’s objective is for New Zealand to have a reliable and efficient money and payments system that supports innovation and inclusion.
“We certainly think that competition in private money is healthy. But we need a level playing field where regulation matches risk across all technologies, consumers have real choice in how they pay and save, and trust in private money is preserved.
“On the flip side, new forms of private money can also pose risks to users and to the economy more generally. We may need to address private forms of money that don’t appropriately safeguard the interests of users, or which misuse market dominance. We need to ensure neither the stability of the financial system nor our ability to influence the economy through the likes of interest rates are lost,” says Woolford.
He adds that there is a wide range of regulatory approaches being taken around the world.
“Our focus will be on striking the right balance between enabling innovation, treating all private money forms fairly and managing the risks for users and the broader economy. Our consultation is asking for feedback on where that balance lies and the role of regulation in achieving this.”
The issues paper The Future of Money – Private Innovation in Money and background information is available on the bank’s website. The bank will be offering stakeholder webinars and other opportunities to discuss the paper in February and March with feedback closing on April 3, 2023.
Woolford said that currently cryptoassets are used for high-risk and speculative investments.
“Nevertheless, some cryptoassets may become more widely used as money in the future and it is the Reserve Bank’s responsibility to prepare for this. As part of our response we are developing a monitoring framework to watch and assess developments.”
The statement also explains that a cryptoasset “is a digital token that relies on cryptographic methods and non-traditional payment infrastructure to be transacted and stored”.
A stablecoin “is a type of cryptoasset that aims to stabilise its value relative to other conventional assets, including central bank money.”