The technology now exists to implement a CBDC, but it needs to be well designed, says bank governor
The Reserve Bank of New Zealand (RBNZ) is commencing its Central Bank Digital Currency (CBDC) proof-of-concept design work after taking into account the public’s feedback received during a recent consultation.
The central bank said a CBDC would provide a platform for economic and financial innovation, including competition in the payments and settlements sector, cross-border transfers, and financial inclusion- and capability-building tools.
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The design work will be a multi-stage and multi-year effort. No decision has yet been made on what form of CBDC was right for New Zealand.
“The technology exists now to implement a CBDC, but it needs to be well designed,” Orr said in a recent conference in Wellington. “At a basic hygiene level, a CBDC must be user-friendly, resilient to cyber and other operational risks, and enable privacy. These features promote widespread trust and use.”
Orr added that a CBDC “can be designed in such a way that privacy can exist alongside design features that make it hard for central bank money to be used for nefarious or illegal purposes.” This means the CBDC design “will be driven by broad community, rather than specific commercial, interests,” he said.
Consultation on an issues paper, Future of Money – Cash System Redesign, closes on March 7. The paper sets out issues facing the cash system and raises options including requiring banks to offer cash services and retailers to accept cash.
