Saha Swatilakha
New Zealand is embarking on a multi-stage exploration to introduce a central bank digital currency (CBDC), also known as “digital cash,” according to an announcement by the Reserve Bank of New Zealand (RBNZ) on April 17. This move comes as innovations in money and payments are challenging the country’s monetary sovereignty, according to Ian Woolford, Reserve Bank Director of Money and Cash.
Digital cash would coexist with physical cash options and would not require a commercial bank account for usage, only a digital wallet, payment card, or mobile app. The RBNZ emphasized that digital cash would bring more enhancement to privacy, security, and trust for users, adding that the central bank “will not control or see how you spend your money.”
The consultation period for shaping the high-level design of digital cash will last until July 26, 2024, marking the initial phase of this exploration, with ongoing opportunities for public engagement. This decision follows comments made by Adrian Orr, governor of the Reserve Bank of New Zealand, who criticized stablecoins, stating that they can’t replace traditional currency and are inherently unstable.
Meanwhile, the global financial super app Revolut has launched its services in New Zealand, delivering Kiwis a first-of-its-kind digital money experience. As New Zealand explores the potential of digital cash, the RBNZ has said it won’t propose a regulatory approach towards stablecoins and cryptocurrencies yet but would recommend increased vigilance. This approach highlights the country’s commitment to embracing innovation while ensuring the safety and security of its citizens.
