New Zealand central bank opens public consultation over CBDC proposals

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The central bank of New Zealand has asked for submissions from the public of views around a proposed central bank digital currency (CBDC) after publishing two separate discussion papers on a digital dollar for the country.

The two papers, titled “The Future of Money – Stewardship” and “The Future of Money – Central Bank Digital Currency” set a deadline of December 6 for public comment, following the reserve bank’s pledge to begin discussions around a prospective CBDC earlier in the year.

Reserve Bank of New Zealand Assistant Governor Christian Hawkesby said the trends in cash identified in the discussion papers could pave the way for greater innovation in money and in the wider New Zealand economy.

“Trends in cash use and availability along with digital innovation create opportunities to innovate. We believe these should be discussed widely and our consultations aim to encourage that,” Hawkesby stated.

In the papers, the central bank said it sees opportunities for expanding the scope of central bank money through a central bank digital currency, which it suggests could help promote financial inclusion and security.

The papers also cast a dim light on stablecoins, highlighting concerns about the impact on financial stability and the sovereignty of the central bank in issuing currency within the New Zealand economy.

Hawkesby said a digital currency would allow cash to be more freely enjoyed in the digital world.

“A central bank digital currency would see the features and benefits of cash enjoyed in the digital world, working alongside cash and private money held in commercial bank accounts.”

A further policy paper is expected to be published in November, looking at options for improving resilience and efficiency through a central bank digital currency.

It comes at a time of increasing interest from central banks globally in pursuing CBDCs.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read  nChain’s CBDC playbook.

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