Summarised by Centrist
The Reserve Bank of New Zealand (RBNZ) is exploring the introduction of a central bank digital currency (CBDC) to maintain monetary sovereignty and stay relevant in the rapidly evolving financial landscape.
But Ian Woolford, the RBNZ’s head of money and cash, admitted it is still years away and would have to be “extraordinarily secure”.
The RBNZ is considering the launch of a central bank digital currency (CBDC) to preserve its control over the monetary system and ensure monetary sovereignty as traditional cash usage declines.
According to Woolford, a CBDC would provide more transactional choices and potentially boost competition in the payments sector. However, the government acknowledges public concerns about privacy and control.
“I can see the link that people make and absolutely don’t want to say it’s not a warranted concern,” he told NZME.
Despite some nervousness from banks, the RBNZ believes that central bank-issued currency plays a crucial role in implementing effective monetary policy, such as interest rate adjustments.
Woolford warned that without a CBDC, the future could see the central bank’s influence diminish, leading to a fragmented currency system dominated by various stablecoins.
Editor’s note: These privately issued digital currencies are not true currencies, as their use is limited and their value is highly volatile. Given New Zealand’s small size, and the suspicions digital currencies are the framework of additional government control, some suggest it might be wiser to observe developments in larger economies before working on a CBDC.
