New Zealand has reportedly launched a study on the feasibility, benefits and risks of a central bank digital currency known as CBDC.
To look forward
This was announced by the Reserve Bank of New Zealand via a Press release. From there, it became clear that the Reserve Bank of New Zealand will begin consulting with the public on FinTech that could be extremely important to “the future of how New Zealanders pay and save.” Deputy Central Bank Governor Christian Hawkesby said of the new developments:
“We will not only examine what we should be doing as an asset manager, but also what a resilient and stable monetary and monetary system might look like in New Zealand in the future, and how to make the most of digital innovations. in matters of money and remuneration. With this, we are really looking to the future.
The vast majority of central banks are considering a potential CBDC
New Zealand is not the first country to explore the possibility of its own CBDC. China, for example, is well advanced in this process and hopes to be able to get started soon. This would make China the first country in the world to launch its own CBDC. In addition, several countries are currently carrying out a similar study. It is therefore possible that other countries will follow in the relatively short term with the decision to launch a CBDC.
In fact, according to a survey by the Bank for International Settlements, also known as the BIS, 86% of central banks around the world are now studying the potential of CBDCs. About 60% are said to already be experimenting with the relatively new technology.
Around August of this year, New Zealand’s central bank will release a series of articles to the public, including one on CBDCs and digital currencies.
Transition to a cashless economy
The bank also said the potential for a central bank digital currency to work with cash is now fully explored. This will cause problems that will need to be addressed. It also examines the current monetary system and how it will need to be adapted to meet the needs of users.
As in many countries around the world, the use of cash is also steadily declining in New Zealand. According to accounts, 80% of New Zealanders still have money in their pockets. The country has lagged behind its economic counterparts in phasing out cash. However, the country is also now seeing the use of large amounts of money decrease. This automatically means that the number of digital payment methods has only increased in the last few years.
So a digital version of local fiat currency doesn’t seem strange. Such a CBDC could in turn play a major role in the transition to a fully cashless economy, or at least in reducing cash payments. However, it is not yet clear whether New Zealand will actually opt for a CBDC, despite this it is a positive sign.
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