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Have your say about the Future of Money for the People of Aotearoa

At a high level, our response agrees with the motivations that the RBNZ has considered and the opportunities afforded by a CBDC.

Posted November 26, 2021

A New Zealand 1 dollar coin
A New Zealand 1 dollar coin

The Reserve Bank of New Zealand (RBNZ) is inviting you to submit your views on a Central Bank Digital Currency (CBDC). The CBDC is proposed to help make the Kiwi Dollar more reliable and inclusive for all people in Aotearoa. 

What is Central Bank Digital Currency (CBDC)?

In short, CBDC will work similarly to money that you deposit at a bank. You can transfer digital Kiwi Dollars from your CBDC account to another, and receive some in the same manner. The distinction is that no private bank is involved here.

The declining use, acceptance and availability of cash in New Zealand, and emerging innovations in private money, namely stablecoins, are two of the key reasons behind this proposal.

The RBNZ sees a CBDC as providing a fair and equal way to pay and save, and a step towards better financial inclusion.

What can you do to help achieve financial inclusion in New Zealand?

Every voice matters in steering this crucial decision that will impact New Zealand and our place in the world economy.

First, we recommend that you read the RBNZ’s issues paper, which highlights the opportunities and challenges of a CBDC being implemented in New Zealand.

Second, if you have recommendations or a point of view on any of the elements outlined in the issues paper, please share your views with the RBNZ by 10am, Monday, 6 December 2021. You can do this by going to the feedback page where you can submit your response online. Or if you want to have a printed copy of the feedback form, you can download it here.

Our thoughts on RBNZ’s issues paper on Central Bank Digital Currency

Overall, we’re super impressed that the Reserve Bank of New Zealand is exploring whether a CBDC is right for Aotearoa. We’re glad that the RBNZ is engaging both the public and private participants of our financial system.

At a high level, our response agrees with the motivations that the RBNZ has considered and the opportunities afforded by a CBDC.

We believe that while all are important, innovations in private money is the key consideration given this is already happening at pace in the industry. Another motivation we will propose, in addition to those outlined, relates to New Zealand’s global competitive standing and overall economic development.

We also agree with the design principles — uniform, universal, cash-like, and innovative. In particular, we believe the principle of privacy (covered within “cash-like”) is critically important. Digital currencies are easily traceable, and we believe everyone should have the right to conduct their financial lives without government oversight of every transaction they make.

Design principles of the Kiwi Dollar CBDC as described by the Reserve Bank's issues paper.
Design principles of the proposed digital Kiwi Dollars. Source: RBNZ’s CBDC Issues paper (page 32)

Alongside these principles, we would suggest two additions: interoperability and sustainability. Interoperability is key to achieving the benefits outlined in this paper and a connected financial system. Sustainability is defined by the opportunity to create a more environmentally sustainable currency. This can be achieved by fully understanding the technological developments of blockchain.

The challenges we foresee that a CBDC needs to address is the issue of digital exclusion within NZ. This includes a lack of access to appropriate levels of scam prevention education and cyber security. There are also privacy risks associated with the AML guidelines being proposed by the FATF (if blockchain technology is not used for analysis and consensus).

Share your thoughts directly to the Reserve Bank of New Zealand

We encourage you to share your thoughts, your recommendations, and your voice to the RBNZ, so we can all contribute to a fairer financial system for Aotearoa!

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Last updated November 26, 2021

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