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New Zealand’s View on CBDC

The Reserve Bank of New Zealand stated recently that even though the central bank is continuing the research on CBDC, they have “no immediate plans to launch a CBDC in New Zealand.”

At the annual conference of the Royal Numismatic Society of New Zealand, Christian Hawkesby said that “CBDCs present a range of high-level benefits and challenges.” Together with the other benefits, there is also increasing access to cash and financial inclusion promotion.

Since 2018, New Zealand had been exploring the CBDCs, since it published a bulletin called “The pros and cons of issuing a central bank digital currency.” A report in January from the Bank for International Settlements (BIS) showed that over 80% of the world’s central banks look into CBDC’s.

Recently, Hawkesby had summarized the findings of BIS on why the countries have looked into CBDCs. For the declining use of the physical cash, it is an overreliance on the physical money that left too many people outside the financial system or even a sense the foreign or private currencies that are becoming widespread.

However, most of the world’s central banks are researching the CBDCs, like New Zealand, and are not issuing them soon. Moreover, it can take several forms. The proposals from the banks seldom describe the CBDCs as cryptocurrencies. With that being said, some suggestions have taken inspiration from the decentralized ledger technology.

So far, China had been the principal advocate of the technology; its massive CBDC program is under large trials in Shenzhen. The Bahamas will then gradually release the CBDC sometime this week. Cambodia’s quasi-crypto and Marshall Island’s full-fledged crypto are all under their respective governments’ consideration.

New Zealand’s interest in the CBDC will be to create a kind of digital cash. Hawkesby stated that “Cash is being used less as a means of payment and access to cash is declining.” He noted that banknotes comprise just 7-9% of liquid money and that 6% of New Zealanders rely on cash for everyday needs.

Right now, the CBDCs are not yet on the cards. However, Hawkesby said that echoing the attitudes of so many central banks,

“We are…following developments very carefully.”

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