The central bank said that this is an opportune time considering the CBDC benefits and its use as a monetary policy tool. On Thursday, September 30, RBNZ has released the documents for public consultation. The central bank noted :
“Trends in cash use and innovation in money present an opportunity for the Reserve Bank to consider broadening central bank money to include a widely available digital form. 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).”
RBNZ assistant governor Christian Hawkesby said that banks need to innovate ensuring the best financial interests of the Kiwis. Hawkesby further added :
“We’re seeking public input on how we should assess the case for central bank money in a digital form alongside cash. We still have work to do to preserve cash and the cash system for those that need it. At the same time, trends in cash use and availability along with digital innovation create opportunities to innovate as well as challenges.”
Improving Domestic Payments Efficiency
RBNZ said that a CBDC initiative will help New Zealand participate in the global movement of experimenting with a digital currency. Furthermore, it can improve domestic payments efficiency as well as cross-border payments.
However, a CBDC development requires a multi-stage approach and long lead times. RBNZ said that the digital currency should support the New Zealand dollar “as our single unit of account”. Furthermore, it should be able to exchange in a 1:1 ratio with cash.
RBNZ believes that a CBDC will have multiple benefits thereby supporting the value anchor role of the central bank money. The three major benefits mentioned by RBNZ are:
Staying relevant with the digital future and improving the technological form of central bank money.
Serving as a potential monetary policy tool to offer monetary stimulus.
Facilitating long-term conversion of private money to central bank money for individuals and businesses.
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