New Zealand consults on digital cash

The Reserve Bank of New Zealand has opened a consultation on the potential launch of a central bank digital currency.

The central bank says the currency would be “digital cash”, backed by the government and sitting alongside notes and coins.

Explaining the potential benefits of a CBDC, the Reserve Bank’s director of money and cash, Ian Woolford, says it would “support competition and innovation by enabling our powerful fintech sector”.

He continues: “Digital cash would be mainly used for payments by individuals and businesses, to pay online, instore, or even to pay your child’s pocket money in the same way you can use cash currently. You could use it to do new things like make an instant digital payment to anyone in New Zealand.”

Woolford stresses that any digital cash would also be private and secure and would work via Bluetooth so that payments can be made without an internet connection.

A consultation on the subject will run until 26 July but the bank is taking a cautious approach to the project, promising a “multi-stage exploration until around 2030”.