New Zealand’s Reserve Bank Explores the Idea of Central Bank Digital Currency (CBDC)

Bhushan Akolkar
September 30, 2021
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Better late than never, New Zealand’s central bank is exploring the idea of having a central bank digital currency (CBDC) in the country’s financial ecosystem. The Reserve Bank of New Zealand (RBNZ) said that a digital currency will include its potential use as a monetary policy tool.

The central bank said that this is an opportune time considering the CBDC benefits and its use as a monetary policy tool. On Thursday, September 30, RBNZ has released the documents for public consultation. The central bank noted:

“Trends in cash use and innovation in money present an opportunity for the Reserve Bank to consider broadening central bank money to include a widely available digital form. The declining use, acceptance and availability of cash in New Zealand, and emerging innovations in private money, namely stablecoins, make this an opportune time to consider a central bank digital currency (CBDC).”

RBNZ assistant governor Christian Hawkesby said that banks need to innovate ensuring the best financial interests of the Kiwis. Hawkesby further added:

“We’re seeking public input on how we should assess the case for central bank money in a digital form alongside cash. We still have work to do to preserve cash and the cash system for those that need it. At the same time, trends in cash use and availability along with digital innovation create opportunities to innovate as well as challenges.”

Improving Domestic Payments Efficiency

RBNZ said that a CBDC initiative will help New Zealand participate in the global movement of experimenting with a digital currency. Furthermore, it can improve domestic payments efficiency as well as cross-border payments.

However, a CBDC development requires a multi-stage approach and long lead times. RBNZ said that the digital currency should support the New Zealand dollar “as our single unit of account”. Furthermore, it should be able to exchange in a 1:1 ratio with cash.

RBNZ believes that a CBDC will have multiple benefits thereby supporting the value anchor role of the central bank money. The three major benefits mentioned by RBNZ are:

  1. Staying relevant with the digital future and improving the technological form of central bank money.
  2. Serving as a potential monetary policy tool to offer monetary stimulus.
  3. Facilitating long-term conversion of private money to central bank money for individuals and businesses.
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Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets. 

He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.