The Reserve Bank of New Zealand Initiates Consultation on Central Bank Digital Currency
The Reserve Bank of New Zealand has commenced a new consultation period regarding a central bank digital currency (CBDC) on April 17. This phase of development is focused on gathering input on “high-level design options for digital cash.”
The proposed digital cash would be denominated in New Zealand dollars (NZD) and would allow retail users to exchange it for physical cash, bank deposits, and other balances. While the Reserve Bank of New Zealand would be responsible for issuing the CBDC, it would not directly distribute the asset to users. Instead, private sector entities, such as banks and payment firms, would handle the distribution of digital cash and provide related services.
The CBDC is described as private, secure, and trustworthy, with an emphasis on not controlling or monitoring users’ spending. It aims to enhance financial inclusion by being accessible to a broad audience, including unbanked users who do not have a bank account. The system will also support offline functionality, enabling transactions via Bluetooth during network outages.
In comparison to other emerging financial technologies like stablecoins and cryptocurrencies, the Reserve Bank believes that a CBDC would pose less risk to New Zealand’s monetary sovereignty and economy. The CBDC will also support smart contracts, allowing for programmable payments typically associated with blockchain and distributed ledger technologies.
The current consultation period is set to conclude on July 26, with options for additional consultations. The development process is expected to continue until 2026, with prototypes planned for 2028-2029 and a potential launch of the CBDC around 2030.
This article was posted in the Banking and CBDCs categories.
