With the imminent rise of the cryptocurrency industry in this modern-day and age, many nations have strived to counter this booming industry with the emergence of central bank digital currencies, more commonly known as CBDCs. Numerous countries have already begun preparations to implement their own respective CBDCs, chief among which being China, the United Kingdom, Indonesia, and more.
Now, it looks like New Zealand is the latest country to consider this option, and the country’s Reserve Bank has begun initiating discussions about potentially implementing a CBDC. The goal of implementing a central bank digital currency in New Zealand seems to be for it to function alongside cash and cash-based assets as a form of currency that is officially backed by the local government. Additionally, a potential CBDC may additionally address all of the prevalent issues regarding the appearance of specific cryptocurrency assets like stablecoins.
As such, the Reserve Bank has stated that the potential implementation of a digital currency backed by the government could serve as a solution towards solving the issue of cash being used considerably less within the country. It will therefore look towards cryptocurrencies and the possibility of using the new digital asset to hopefully close the gap.
With this in mind, the bank will be opening up discussions and public consultations pertaining to the aforementioned potential implementation as well as the appearance of new kinds of digital assets and money, which also include stablecoins.
Moreover, it had been during an announcement made yesterday that the bank unveiled its plans of releasing feedback forms and papers designed to garner knowledge about the current problems being faced regarding cash and money in New Zealand. This feedback shall be conducted from this upcoming August all the way till November. This set is also the next step taken by the bank pertaining to the previously held consultations about the ‘Future of Cash’, which had taken place in 2019.
CBDC will not be deployed anytime soon, according to Hawkesby
Christian Hawkesby, the Assistant Governor, stated back in October 2020 that there were no plans at the time to deploy a central bank digital currency in New Zealand and that a holistic and new approach would have to be adopted before such an initiative could be worked upon. Now, as per his latest announcement, Christian has claimed that the country is currently exploring different possibilities of potentially introducing a CBDC sooner than expected in order to address the issues centered around the usage of physical cash.
He later went on to say that while a CBDC could be the answer, rigorous tests will have to be conducted, and a lot of data will have to be thoroughly analyzed before any viable proposals can be fully developed.