New Zealand’s Reserve Bank to Assess CBDC Prospects in Research Papers
With Central Bank Digital Currencies (CBDCs) already gaining traction among different countries and central banks around the world, New Zealand’s Central Bank has its sights set on a CBDC, which it said would exist alongside its fiat currency (New Zealand Dollar or the Kiwi). The central bank will also examine the use and adoption of the cryptocurrencies in the country, according to reports. Reports indicate that the bank hopes to use the proposed CBDC to address the challenge of decline in the use of the New Zealand dollar.
As part of the bank’s attempts to accommodate and widen the scope of its currency system to include digital currency for the benefits of citizens of the Oceania country, it will give room for public consultation. The Central Bank stated that it will use the rest of the year for research including public consultation on the idea of a CBDC and the advent of novel digital currencies including stablecoins backed by fiat currencies, such as the USDC backed by the US Dollar on a 1:1 ratio.
NZ Central Bank To Consult Public on CBDC and Cryptocurrencies
In a Wednesday notice, the bank stated that it will issue a series of papers bordering on money and fiat issues to gather opinions from next month until September, and in order to consolidate on the opinions from the paper it released in 2019, which was titled, ‘The Future of fiat. In the same notice, the Central Bank said it will put out crypto-based papers while sourcing for opinions on the prospects of a CBDC which will be backed by the government together with the fiat currency.
The papers will also focus on the likely risks that innovations relating to money and payment gateways as well crypto assets pose to the economy and financial system of New Zealand. Although New Zealand’s Central Bank is receptive to the idea of a CBDC, it looks to approach it in a circumspect and objective manner.
Assistant Governor of NZ Central Bank Admits CBDC Needs More Input
Last year, the bank’s assistant governor, Christain Hawskeby, who also doubles as the bank’s General Manager of Economics, Financial Markets and Banking noted that the central bank had no immediate plan to issue a CBDC. Furthermore, Hawskeby observed that to put out a currency that addressed the needs of the people, a novel and exhaustive effort had to be taken. He said the principal bank admits that there is a lot of input to be made, while contemplating a CBDC issuance.
Meanwhile, despite the growing acceptance of digital currencies and the resulting effect of the decline in fiat use, citizens still vastly respect the country’s fiat currency because it promotes inclusion and gives them options in the way they pay for services and save. Hawskeby added that individual and retail consumers still contend with losing fiat and individual banking offerings despite the efforts of banks to assist them. According to Hawskeby, since most people in the country now prefer the use of digital currencies, the central bank will ensure that it considers a digital currency backed by the government.
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