New Zealand central bank releases issue paper on digital currency

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The Reserve Bank of New Zealand (RBNZ) published a paper number providing his perspective on digital currencies of central bank (CBDC).

The paper outlines goals, CBDC projects, as well as the potential benefits and related risks. The bank will seek comments on the proposed article by December 6th.

The document focuses about a “general-purpose” CBDC, which is a digital currency issued to “any individual or company that wants to use it.”

“Such a“ general-purpose ”CBDC would be closer as money and better placed to fulfill the role of central bank money than a“ wholesale ”CBDC,” RBNZ wrote.

The central bank emphasized that a possible New Zealand CBDC would be digital money issued by the bank along with cash. While the amount of money in circulation has grown in New Zealand, it is still used “proportionately less for most people’s transactions,” the bank noted.

“We want people to know that the case for keeping cash is well understood and accepted by the Reserve Bank. Cash is here to stay as long as some of us need it,” said RBNZ assistant governor Christian Hawkesby.

The paper also shows two major technology CBDC projects, including “account” CBDC, which relies on conventional account structures, and “token-based” CBDC, which is enabled by new technologies such as blockchain and public-private key cryptography. .

According to the RBNZ, a token-based CBDC could enable the automatic execution of certain actions such as rent or bill payments through smart contracts, thus reducing the need for manual or third-party participation. Token-based CBDC could also support the development of new retail payment services, the bank added.

Related: CBDCs can reduce cross-border shipping costs by half: a BIS report

The central bank also said its proposed CBDC offers an opportunity to design a monoform that balances interests of privacy and traceability. “Users may want to maintain full privacy during treatment, whether for legal or illegal reasons. Meanwhile government agencies may want to retain some traceability of CBDC balance sheets or signs to reduce tax evasion or avoidance, or money laundering and terrorist financing,” RBNZ noted.

RBNZ officially announced its plans to open public consultations on CBDC in July. Last year, RBNZ vice-president Christian Hawkesby claimed that New Zealand had “no short-term plans” to issue a CBDC.