The Reserve Bank of New Zealand has launched a public consultation to discuss the future of money and also about central bank digital currencies (CBDCs).
The CBDCs have been dominating any kind of high-level monetary discussions around the world from any of the central banks with certain countries like Nigeria going ahead with them as of today. Some other countries are in a wait and watch mode to see and study the impact of CBDCs on the financial ecosystem before they make their decision while many central banks have gone ahead with discussions about their impact and the strategy for implementation of the CBDCs in the financial system. The ideas surrounding this are a bit muddle up at this juncture as each central bank trying to forge its own path but a collective and coordinated effort is likely needed from across the various central banks to achieve a sound and regulated CBDC ecosystem.
Assistant Governor Christian Hawkesby, said: “We’re seeking public input on how we should perform our role as steward of money and cash, and how we should assess the case for central bank money in a digital form alongside cash.”
Though the bank has not indicated any form or shape for the digital currency and has also not indicated any sort of timeline as well, the fact that New Zealand has joined a host of countries that are actively looking into digital currencies should in itself be a boost to the digital currency ecosystem. There are a lot of issues that need to be studied and addressed and from this, it is clear that any sort of implementation of a digital currency is still quite far off in the future.
“We still have work to do to preserve cash and the cash system for those that need it,” Mr. Christian said. “At the same time, trends in cash use and availability along with digital innovation create opportunities to innovate as well as challenges. We believe these should be discussed widely and our consultations aim to encourage that.”
The challenge for the central banks would be to make both the cash and digital currency systems work together and also work with external, cross-border payment systems as each country would be operating a different currency with a different DLT system. Making them interoperable would be the biggest roadblock.