New Zealand central bank reviews digital currency through a paper
The Reserve Bank of New Zealand (RBNZ) has recently published an issue paper delivering its perspectives on central bank digital currencies (CBDC).
The latest paper consists of CBDC’s designs, purposes, potentials, and associated risks, for which the bank is seeking comments from stakeholders and associations until December 6.
The document is mainly focused on a “general-purpose” CBDC, a digital currency, issued to individuals or organizations wanting to use it. Such a “general-purpose” CBDC would closely function as cash. It would also be placed in fulfilling the role of a central bank money than “a wholesale CBDC,” the bank outlined.
In the paper, RBNZ has also stressed that a potential New Zealand CBDC would function as a digital money issued by the bank along with cash. While the circulation of cash is growing in the country, it is still used “proportionally lesser” by people for transactions, the bank has commented in the paper.
Assistant governor of RBNZ, Christian Hawkesby, has assured New Zealanders that “cash is here to stay” for as long as people need it.
The paper has also pointed two significant technological CBDC designs, including an “account-based” CBDC and a “token-based” CBDC wherein one relies on conventional account-based units, and the other is enables through public-private key cryptography and blockchain.
According to RBNZ, token-based CBDC has the potential to enable automatic execution of actions such as bill or rent payments through smart contracts and so on, hence reducing the third party involvement. It can further support the new development of retail payment services.
New Zealand’s central bank has also proposed CBDC as an instrument of opportunity for designing money that balances both privacy traceability. While users can retain their private details during the transaction, the government agencies can retain traceability for security purposes to reduce tax evasion, terrorism financing and money laundering, the bank noted.
The RBNZ has announced officially its plans of opening up public consultations regarding CBDC. Last year, Hawkesby had claimed that New Zealand had “no immense plans” for issuing a CBDC.
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