Reserve Bank plans to launch digital currency by 2030

A public consultation on the design of New Zealand’s digital cash system closed last week, with more than 18,000 responses received.
photo: 123 RF

The Reserve Bank of New Zealand plans to launch a government-backed digital currency by 2030.

This is the second phase of a multi-year project to consider the use of digital cash, which would circulate alongside physical notes and coins.

A public consultation on the design of New Zealand’s digital cash system closed last week, with more than 18,000 responses received.

Ian Woolford, head of currency and cash at the Reserve Bank, told Saturday morning,Especially at CrowdStrike failureit wants digital cash to be as similar to physical cash as possible.

“That means when there’s a power outage or internet outage, you can still use it,” he said.

While the Reserve Bank confirmed it would not phase out cash, Woolford said it was becoming increasingly difficult to access cash, so digital alternatives were needed.

“We want to preserve the cash system. We want it to be available as long as people need it, but it’s also important for us to look to the future and consider implementing digital cash so people can continue to have access to central bank money.”

However, Dr Chanelle Duley, an economics lecturer at the University of Auckland, said the four countries that have launched central bank digital currencies – the Bahamas, Nigeria, Zimbabwe and Jamaica – have all struggled with adoption.

Woolford said the Reserve Bank was still in the early design stages and would soon begin consulting with focus groups and would launch the digital currency by 2020.

He said the Reserve Bank had taken a different approach from other central banks by specifying that third-party providers did not have to be banks.

“The New Zealand banking system is the most profitable banking system in the world.”

“We think there is a lack of innovation in the New Zealand payments system and we think digital cash could really boost competition.”

He said digital currencies would spur innovation and competition, and everyone would benefit.

“We want to enable people to make offline transactions when there is a network outage, when there is a power outage, so that people have choice, trust and confidence in using the New Zealand dollar.

“People can choose whether to use digital cash, but we want people to be able to use it whenever they want.”