New Zealand Begins Plans To Introduce CBDC
The Reserve Bank of New Zealand (RBNZ) has begun its public consultation on “Digital Cash,” a proposed central bank digital currency (CBDC), as disclosed in a consultation paper released by the central bank on April 17.
The consultation is in its second stage and will last 101 days, between April 17 and July 26. After feedback and the development of a business case from Stage 2, a decision is expected to be made on advancing to Stage 3.
To understand the rationale behind the New Zealand CBDC, it’s important to examine the motivations and objectives outlined in the consultation paper.
According to the Consultation Paper, New Zealand’s Digital Cash will be a retail-focused CBDC, primarily targeting consumers and corporate users.
We’re looking at introducing a new payment option for New Zealanders – Digital Cash – an electronic version of cash, that would sit alongside but not replace physical cash. Learn more in the video and have your say here: https://t.co/FcRyY69TPI pic.twitter.com/Je4q3Q9IE6
— Reserve Bank of NZ (@ReserveBankofNZ) April 16, 2024
The Reserve Bank said its motivation for issuing a CBDC is the decline in the use of physical cash. This could adversely affect financial inclusion for those who rely on cash.
The consultation paper also included a survey showing that about 58% of consumers used physical cash as of 2023, a drop from 63% recorded in 2021, indicating a gradual reduction in fiat usage.
In addition to declining cash usage, the RBNZ wants to provide digital cash to meet needs and play a key role in financial innovation.
The consultation paper also highlighted the rapid development of innovations in crypto assets, distributed ledgers, and digital currencies issued by global technology companies.
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