New Zealand central bank interested in researching CBDCs

The Reserve Bank of New Zealand’s Assistant Governor, Christian Hawkesby, noted that overall demand for cash is declining

Picture of Queen Street, Auckland, New Zealand
The Central Bank remains open to the possibility of CBDCs in the future

The central bank of New Zealand has announced that it plans on conducting extensive research on cryptocurrencies. However, it clarified that it does not yet have any “imminent” plans for introducing one of their own.

Christian Hawkesby, the Assistant Governor and General Manager of the Economics, Financial Markets, and Banking Group, offered some insight into the country’s central bank digital currency (CBDC) position in a speech that was delivered to The Royal Numismatic Society of New Zealand on Monday 19th of October.

While he did note that the central bank had a role in the management of currency and the need to look to the future of money, Hawkesby also made it clear that the country has not made any immediate plans to launch a CBDC of its own.

“Today, the vast majority of New Zealand’s money balances are digitally represented, and banknotes make up just seven to nine per cent of liquid money”. Hawkesby explained, highlighting how cash is being used less as a means of payment and that as a whole, access to cash is on the decline.

Hawkesby first gave an outline on New Zealand’s history of money, noting that the Maori did not issue any form of fiat currency. He then discussed the role of cash in the midst of the pandemic, digital currencies, and the role of the central bank in moving forward.

However, Hawkesby did maintain that cash had its benefits, like its role in peer to peer payments. He also suggested that there was an increase in the demand for cash during the first few months of the COVID-19 lockdown and that the circulation of cash has continued to grow even during the second quarter.

Australia, which is the closest neighbour of New Zealand, has also stated recently that it does not need a retail CBDC. Tony Richards, the Payments Policy Chief at the Reserve Bank of Australia (RBA), stated that “the Bank’s view is that no strong public policy case has yet emerged for the introduction of a CBDC for general use”.

Richards has stated that Australia already has a robust payment network that is capable of catering to the needs of individuals and corporations alike. As a result, the RBA does not yet see a way for retail CBDCs to provide any distinct improvement to the country’s existing infrastructure.

However, Richards did reveal that the RBA is monitoring the developments that are surrounding sovereign digital currencies. Many countries, such as Canada, have been looking into the development of a CBDC of their own.