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New Zealand’s Exploration of a Central Bank Digital Currency
The Reserve Bank of New Zealand (RBNZ) is currently exploring the potential of a central bank digital currency (CBDC) known as “Digital Cash” to address the declining usage of physical cash and to foster innovation in the payments sector.
New Zealand CBDC Consultation
The RBNZ has initiated a public consultation on “Digital Cash,” a proposed CBDC aimed at consumers and corporate users. The consultation will last for 101 days, from April 17 to July 26, to gather feedback and develop a business case for further advancement.
Motivation & Objectives of New Zealand CBDC
The motivation behind New Zealand’s CBDC is to combat the decrease in physical cash usage, which could impact financial inclusion. The RBNZ aims to provide digital cash as a new payment option that coexists with physical cash, not replacing it.
- 58% of consumers used physical cash in 2023, down from 63% in 2021.
- RBNZ sees digital cash as a way to promote financial innovation and maintain monetary sovereignty.
- Digital cash will enhance payment services in New Zealand and support digital transformation.
Four-Stage Path Towards New Zealand CBDC
RBNZ has outlined a comprehensive four-stage approach to develop and implement the New Zealand CBDC:
- Stage 1: Assessment of the need for digital cash (2021).
- Stage 2: Design options, consultations, and budget frameworks.
- Stage 3: Development and testing of prototypes.
- Stage 4: Official launch of the New Zealand CBDC by 2030.
Global CBDC Developments
Other countries are also actively exploring CBDCs:
- South Korea is expediting its CBDC project, planning to test the digital Korean Won with citizens.
- Hong Kong is in the second phase of its e-HKD program, exploring digital currency possibilities.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
