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New Zealand Explores ‘Digital Cash’ Issuance in Trial Run
April 17, 2024 1:45 pm

Key takeaways:

  • New Zealand’s Reserve Bank (RBNZ) has commenced a 101-day public consultation regarding the concepts and layout choices it developed for the nation’s digital currency.
  • A consultation paper on “future work on whether digital cash” is right for New Zealand was released by the central bank on April 17.

New Zealand’s Reserve Bank (RBNZ) has commenced a 101-day public consultation regarding the concepts and layout choices it developed for the nation’s digital currency. In subsequent consultations, the central bank intends to talk about the issuance of a central bank digital currency (CBDC).

In order to issue CBDCs, the RBNZ has adopted a four-step process, with the goal of issuing an internal digital currency by 2023. The Central Bank of New Zealand is currently in the second phase of its digital currency program, which entails budgeting and consulting relating to high-level digital currency design possibilities.

A consultation paper on “future work on whether digital cash” is right for New Zealand was released by the central bank on April 17. The deadline for consultations is July 26.

The consultation paper advocates for adopting CBDC in addition to stressing the necessity of harmonizing with other central banks and decreasing cash usage.

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

The 12 questions in the consultation document cover four main areas: one’s viewpoint on the CBDC in New Zealand, the advantages of digital currency, strategic design, and managed issuance. 

The RBNZ claims that introducing a CBDC and a strong supporting network can encourage innovation in the local payments industry.

Parallel to this, the RBNZ is creating other versions of its digital cash consultation document, which will be accessible before the end of May.

The New Zealand government’s minister of trade and consumer affairs, Andrew Bayly, has warned about his country’s slow experimentation and adoption of blockchain and digital asset technologies.

Bayly’s office responded to the legislative Finance and Expenditure Committee’s questions on cryptocurrency by saying:

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

Eight major recommendations were made by the ministry’s advisors to help New Zealand get back on the global cryptocurrency wave. These recommendations included, among other things, enacting laws and policies to promote advancements in blockchain technology and digital assets as well as to encourage increased cooperation between the public and private sectors.

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