November 22nd, 2024
The Reserve Bank of New Zealand - Te Pūtea Matua announced its ongoing exploration of a central bank digital currency, dubbed "digital cash," signalling a transformative step towards enriching the country's digital economy. This initiative marks a pivotal moment in the evolution of money in New Zealand, aiming to ensure that central bank money remains accessible and relevant in the digital age.
Ian Woolford, Director of Money and Cash – Tari Moni Whai Take, outlined the vision for digital cash as a new kind of money that complements existing forms like banknotes, coins, and electronic bank account money. "Digital cash would ensure that central bank money is available to all New Zealanders and able to be used digitally," Woolford explained. Highlighting the drive for innovation, he noted the potential for digital cash to foster competition and support the burgeoning fintech sector.
Amidst rapid advancements in technology and a decline in physical cash use accelerated by the Covid pandemic, the Reserve Bank's move aims to adapt New Zealand's monetary system to modern demands. The proposed digital currency would be designed for everyday transactions, both online and in-store, with features allowing instant payments and Bluetooth-enabled transactions without the need for an internet connection.
As global tech giants and cryptocurrencies challenge national currencies, New Zealand seeks to maintain its monetary sovereignty by innovating its currency. The introduction of digital cash represents a strategic response to these challenges, aiming to keep New Zealand's money system relevant, useful, and under national control.
The Reserve Bank has opened a consultation period from 17 April to 26 July 2024, inviting public input on the design and implementation of digital cash. This consultation is part of a broader, multi-stage exploration set to continue until around 2030, with further opportunities for public engagement planned.