The Reserve Bank of New Zealand is the latest one to jump the CBDC bandwagon. The country’s central bank announced that it is exploring the potential for a central bank digital currency, CBDC “to work alongside cash as government-backed money,” and is assessing the effects around the emergence of crypto assets such as stablecoins.
According to the Reserve Bank, the main objective is to be responsive to digital innovations in money and payments to make resilient and stable cash and currency systems in the country. With that in mind, New Zealand plans to roll out consultations for CBDC working alongside cash as a form of government-backed money. The official press release also mentioned that the Reserve Bank intends to launch a set of “money and cash issues papers for feedback from August to November,” which build upon the “Future of Cash” consultations from 2019.
Assistant Governor Christian Hawkesby said
“Subsequent papers will look at the potential for a central bank digital currency [CBDC] to work alongside cash as government-backed money, issues arising from new electronic money forms including crypto-assets [such as Bitcoin], and stable coins [such as proposed by a Facebook-led consortium], and how the cash system might need to change to continue to meet the needs of users.”
Hawkesby asserted that the country wants to explore the possibilities for a central bank digital currency to help approach some of the drawbacks of reducing physical cash use and services. He went on add,
“A CBDC, similar to digital cash, might well be part of the solution, but we need to test our assessment of the issues and proposed approach before developing any firm proposals.”
CBDC Developments Worldwide
With the latest development, New Zealand now joins the list of some of the world’s major economies currently examining the potential for a CBDC. While China has paved the way. Several countries such as South Korea and Sweden have moved from exploration to piloting stages. Singapore, Indonesia, Cambodia, and Thailand are all in different stages in the exploration and issuance of the digital version of their respective sovereign currencies.
Additionally, Vietnam’s Prime Minister Phạm Minh Chính has also reportedly asked the country’s central bank to start exploring a central bank digital currency as it gains traction across the world in response to the massive popularity of cryptocurrencies.