The Reserve Bank of New Zealand has produced an insights paper that explores the use of a central bank digital currency (CBDC). The paper discusses the potential benefits, opportunities, as well as challenges of issuing a digital currency. The Reserve Bank has put forth a call to the public to heed their advice through a submission. More information, including a copy of the Reserve Bank’s insights paper, is available on the Reserve Bank’s website here.
Here is a summary of the key elements of the Reserve Bank’s insights paper:
CBDC Design Principles
- Uniform: Exchanged 1:1 with cash and support NZD as unit of currency.
- Universal: Provide basic saving and payments to all households.
- Cash-like: Freedom and autonomy (privacy) in saving and paying, personal back-up, enable peer-to-peer.
- Innovative: Uses and drives innovation in New Zealand’s money and payments, potential new monetary policy tool.
- Integrity: Resilient, secure, final, and compliant.
- Managed Issuance: Avoids unnecessary disruption to financial and monetary system.
Proposed Opportunities:
- Ensures NZD remains a unit of account.
- Improves the functionality of central bank money available to the public.
- Additional monetary policy tools.
- Supports financial inclusion directly and indirectly.
- Autonomy and freedom in saving and paying, and personal back-up.
- Improves payments efficiency and resilience.
Proposed challenges:
- Operational, cyber, and data risks.
- Compliance with all regulations.
- Challenges the banking sector funding model.
- Could impact monetary settings.
- Design and implementation complexity.
BlockchainNZ plans to make a submission to the Reserve Bank on this topic on behalf of its members. This submission process will be led by BlockchainNZ Chair, Bryan Ventura, with contributions from executive council members, including Alex Sims, Shahid Saiyad and David Bosman.
BlockchainNZ members are welcome and encouraged to share their views with BlockchainNZ by completing the online form available here. Please complete the form no later than 5pm, 15 November. If you have any questions, please contact our Community Manager, Alison Mackie (alison.mackie@techalliance.nz)
The Final submission may not meet the needs of all members. However, members are encouraged to undertake their own submissions as well. Additional submissions may result in the Reserve Bank giving more weight to those views.
