April 19, 2024
New Zealand Explores Digital Cash
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New Zealand Explores Digital Cash

The Reserve Bank of New Zealand (RBNZ) has initiated a 101-day public consultation on the principles and design options for the nation’s digital currency. However, discussions on the issuance of a central bank digital currency (CBDC) will take place in future consultations.

Roadmap for CBDC Issuance

RBNZ has adopted a four-stage approach to CBDC issuance, aiming to introduce an in-house digital currency by 2023. Currently in the second stage, the central bank is exploring high-level design options and conducting consultations and budgeting.

New Zealand’s four-stage approach to CBDC issuance. Source: consultations.rbnz.govt.nz

Consultation Details

On April 17, the central bank released a consultation paper to gather feedback on the potential adoption of CBDC in New Zealand. The paper aims to determine the suitability of digital cash for the country and closes for feedback on July 26.

“Cash is no longer a core payment medium for many people. The frequency of cash use by New Zealanders continues to fall.”

The consultation paper outlines the benefits of CBDC adoption and emphasizes the importance of aligning with other central banks and addressing declining cash usage. It poses 12 questions covering personal opinions, benefits, strategic design, and managed issuance of a potential CBDC.

According to RBNZ, launching a CBDC with robust supporting infrastructure can drive innovation in the local payments sector. Alternate formats of the consultation paper will be made available by late May.

Government Response and Recommendations

Andrew Bayly, New Zealand’s Minister of Commerce and Consumer Affairs, cautioned against the country’s slow pace in embracing digital asset innovations and blockchain technology. In response to inquiries from the Parliamentary Finance and Expenditure Committee, Bayly’s office said:

“The current ‘wait and see’ approach could risk New Zealand missing out on the benefits of development in the digital asset industry.”

Bayly’s office outlined eight key recommendations to reinvigorate New Zealand’s involvement in the global crypto landscape. These include adopting policies to encourage digital asset and blockchain developments and fostering collaboration between government and industry stakeholders.

Image by wirestock on Freepik

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