The Reserve Bank of New Zealand has embarked on a comprehensive exploration into the potential launch of a central bank digital currency (CBDC), aiming to address evolving challenges in the monetary landscape. Ian Woolford, Director of Money and Cash at the Reserve Bank, highlighted the significance of this initiative in response to advancements in money and payments that are reshaping New Zealand’s monetary sovereignty.
According to a recent press release, the CBDC, often referred to as “digital cash,” is envisioned to coexist alongside physical currency options, offering users greater convenience and accessibility. Unlike traditional banking methods, the utilization of digital cash would only require a digital wallet, payment card, or mobile application, promising enhanced privacy, security, and user trust. Notably, the Reserve Bank assures that individuals’ spending activities will remain private and independent of central oversight.
The consultation phase to shape the foundational framework of digital cash is set to continue until July 26, 2024, representing the initial stage of a comprehensive exploration process expected to extend until around 2030. Throughout this period, ongoing opportunities for public engagement will be provided to ensure diverse perspectives are considered in the development process.
The decision to explore CBDC comes in the wake of criticism from Adrian Orr, Governor of the Reserve Bank of New Zealand, regarding the stability and viability of stablecoins as substitutes for traditional currencies. Orr’s skepticism, expressed during a parliamentary finance committee meeting in February, underscores the Reserve Bank’s commitment to thoroughly evaluating digital currency options in alignment with New Zealand’s monetary objectives and regulatory principles.