Central bank initiates consultations on CBDC compatible with Bluetooth technology
New Zealand’s central bank is embarking on a groundbreaking journey to develop its own central bank digital currency (CBDC), commonly referred to as “digital cash.” Ian Woolford, Reserve Bank director of money and cash, stated that advancements in the realm of money and payments are posing challenges to New Zealand’s monetary sovereignty, prompting the exploration into CBDC.
In a press release issued on April 17, the Reserve Bank of New Zealand explained that digital cash would coexist alongside physical cash options and would not necessitate a commercial bank account for usage. Instead, individuals would only need a digital wallet, payment card, or mobile app. Woolford stressed that digital cash would offer improved privacy, security, and trust for users, emphasizing that the central bank would not have control over or visibility into individuals’ spending habits.
To shape the high-level design of digital cash, a consultation period will take place until July 26, 2024. This marks the initial phase of a comprehensive exploration process, projected to continue until around 2030. The Reserve Bank intends to involve the public throughout this journey, providing ongoing opportunities for engagement.
The decision to delve into digital cash comes in response to comments made by Adrian Orr, the governor of the Reserve Bank of New Zealand. Orr expressed concerns about stablecoins and their inability to replace traditional currencies, highlighting their inherent instability. During a parliamentary finance committee meeting in February, he referred to stablecoins as “the biggest misnomers” and “oxymorons.”
It is noteworthy that the Reserve Bank of New Zealand has not been hasty in implementing regulatory policies related to cryptocurrencies. However, this exploration into CBDC indicates a proactive approach to staying abreast of technological advancements and ensuring the country’s financial system remains resilient.
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