New Zealand Begins Digital Cash Education for Citizens

The Reserve Bank of New Zealand initiated a public consultation on digital cash this Wednesday. The process seeks opinions on key design elements of digital cash, such as interest payments and holding limits. A proposal suggests a $2000 limit, mirroring the digital Euro's model.

Globally, central banks have been examining the potential of issuing their own digital currencies, known as central bank digital currencies (CBDCs). This interest has grown following the increased popularity of cryptocurrencies in recent years.

In 2021, New Zealand began to delve into the future of money and CBDCs, identifying a digital currency as a significant "opportunity." The latest 2024 consultation highlights the benefits of digital cash, including enhanced payment choices, ease of access, and the support of innovative features like smart contracts.

Boosting Competition in Payment Services

The consultation document outlines that digital cash could elevate competition in New Zealand's payment landscape. It suggests that digital cash could facilitate the emergence of new money and payment services from the private sector, which would distribute the digital cash, allowing New Zealanders to select preferred services.

Despite the ongoing discussions and consultations, New Zealand has not yet committed to issuing a digital currency. The proposed CBDC would be pegged to the New Zealand dollar at a 1:1 ratio, exchangeable with physical cash, and accessible around the clock.

The consultation period is set to conclude on July 26, inviting extensive public input on the proposed digital currency framework.