New Zealand's Reserve Bank consulting public on a potential CBDC

The bank will open up public consultations on CBDC and the emergence of new digital forms of money including stablecoins.

New Zealand's Reserve Bank consulting public on a potential CBDC

The Reserve Bank of New Zealand said the CBDC might be a solution to the ongoing reduction in the use of cash and that it will look more closely at the use of cryptocurrencies. 

The Reserve Bank revealed through an announcement that it will be 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. 

The bank will seek feedback on crypto-focused papers that will look at the potential of 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. 

The Reserve Bank appears to be favoring the deployment of a CBDC, but it has emphasized that a measured and cautious approach is required. 

In October 2020, Assistant Governor Christian Hawkesby said that the bank had no imminent plans to deploy a CBDC.

However, In the latest CBDC related announcement, the Assistant Governor 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,” he added.

According to the Assistant Governor, cash is still widely valued because it ensures inclusion and gives the citizens autonomy and choice in the way they pay and save. 

However, Hawkesby noted that digital payments are the preferred option across the country and that the bank's job is to ensure that these transitions work for all New Zealanders. 

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