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New Zealand releases consultation paper on potential CBDC

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TL;DR Breakdown

  • New Zealand’s central bank is seeking public inputs on a potential digital dollar.
  • The bank is positive that the CBDC can preserve the nation’s monetary sovereignty. 

Te Pūtea Matua, the central bank of New Zealand is now exploring the possibilities of launching the nation’s digital dollar. Part of the reason is to preserve the monetary sovereignty of the country following the global trend in cash and innovations in money, according to the document from the bank. 

“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).”

The central bank is of the view that the successful launch of stablecoins and cryptocurrencies in the country could siphon a large number of transactions and savings off from the New Zealand dollar. Hence, they are exploring opportunities in a CBDC to ensure the country’s currency remains the major anchor for the monetary system. 

New Zealand banks seek public inputs on ‘digital dollar’

Per the document, the bank is seeking public inputs on how they should assess the case for central bank money in a digital form alongside cash. They are reportedly considering a “general-purpose” CBDC that will coexist with the New Zealand dollar, and not replace it outrightly. 

Besides other things, the central bank is positive that the CBDC can protect monetary sovereignty and also benefit individuals and businesses, but says “any decision to issue a CBDC would need to carefully consider operational risks, such as cyber security, and impacts on the financial sector.”

Many countries are still in the stage of studying CBDCs, as there are many factors to put into consideration before public launch. For the past months, the PBoC has been actively testing its digital yuan in a selected region. Meanwhile, Nigeria is set to release its national digital currency “e-naira” on October 1. 

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