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The Reverse Bank of New Zealand (RBNZ) is seeking the public’s input on the possible introduction of central bank digital currency (CBDC). They are looking to introduce the digital version of Kiwi. It is part of the bank’s response to the digital advancements in payments and money.
The Push for Digital Currency Adoption
The Assistant Governor of RBNZ Christian Hawkesby said in a statement: ”A Central Bank Digital Currency would see the features and benefits of cash enjoyed in the digital world, working alongside money and private money held in commercial bank accounts.
It could make for much more efficient and integrated platforms benefiting individuals and businesses and protecting monetary sovereignty. However, any decision to issue a CBDC would need to carefully consider operational risks, such as cyber security, and impacts on the financial sector.”
Jerome Powell, the Chair of Fed, said recently that the U.S Federal Reserve would release research on CBDC. He said they would examine the costs and benefits of CBDC. Many countries are exploring the use of the digital form of the current currencies. Central banks and other cryptocurrency investors want to see whether the Fed will issue a digital dollar.
However, the Central Bank has not decided on the exact structure of the proposed CBDC. Speculators say digital currencies that banks issue would differ from other cryptocurrencies like Bitcoin. Essentially, it may be because digital currencies’ prices fluctuate. Their platforms are also decentralized.
RBNZ Joins Other Banks in the World Adopting CBDC
There is a growing number of central banks in the world considering CBDCs. The only bank that is in the CBDC market is the Central Bank of the Bahamas. The Bank of England and the U.S Federal Reserve are researching the field. China is looking to digitize the yuan by the Winter Olympics in 2022. Central Banks in South Africa and Malaysia are doing trials on cross-border payments using various CBDC.
The Australian Reserve Bank (RBA) released a statement in the previous month. They said they are looking to create a digital version of the Australian dollar.
RBA will use this digital version in the wholesale market. Lately, the digital coin has joined the recently-innovated Digital Finance CRC. They are studying the digitization of assets in the real world on the blockchain.
Research conducted by RBNZ indicated that there is a decline in cash use and a rising innovation of stablecoins. The first paper on their consultation will seek feedback on money and money. The following documents will look at issues arising from the new digital forms and the potential of the CBDC. These consultations may continue until November.