The Reserve Bank of New Zealand (RBNZ) recently unveiled findings from its public consultation on the potential introduction of a central bank digital currency (CBDC). The results, based on more than 500 written submissions and 18,000 survey responses, revealed widespread skepticism among New Zealanders, with the majority perceiving the initiative as unnecessary.
The RBNZ conducted the consultation from April 17 to July 26, 2024, with the aim of gauging public sentiment and exploring the feasibility of what they refer to as “digital cash.” More than 70% of participants said a CBDC was unimportant. Only 16% supported the RBNZ’s rationale for developing a CBDC, which includes ensuring access to central bank money in digital form and fostering innovation and competition within the country’s digital economy.
Security, Privacy, and Necessity Under Scrutiny
The consultation highlighted several recurring concerns among respondents. A significant number questioned whether a CBDC was even necessary, with 65% expressing disinterest in proposed features such as automated payments and real-time balance tracking. Security and privacy concerns were particularly prevalent, with 90% of respondents identifying potential government control as their primary apprehension.
The link between CBDCs and increased traceability was a common theme, as many feared that such a system could lead to reduced financial privacy. Although the RBNZ emphasized that the digital currency would not be designed for intrusive purposes, respondents worried about its potential to evolve into a tool for monitoring or controlling financial behaviour.
Perspectives on Cryptocurrencies and Stablecoins
The consultation also revealed respondents’ perceptions of cryptocurrencies like Bitcoin and Ethereum. Most participants expressed minimal concern about the impact of these digital assets on the New Zealand dollar’s use or popularity. Instead, many recognized the advantages of cryptocurrencies, such as their fixed supply and decentralized nature.
Stablecoins were also a point of discussion, with some participants considering them a viable alternative to CBDCs. This perspective was firmly countered by RBNZ Governor Adrian Orr, who criticized stablecoins as inherently unstable and unsuitable as a replacement for traditional currencies. The governor reiterated that direct access to central bank money remains critical for maintaining a resilient financial system.
Addressing Public Concerns
Acknowledging the widespread apprehensions, the RBNZ committed to focusing its research on privacy and autonomy. The central bank emphasized that these elements would be pivotal in shaping its end-user strategy. “We plan to examine a wide range of measures to safeguard privacy and autonomy, including legislative, cultural, and technological solutions,” the RBNZ stated in its report.
RBNZ Director Ian Woolford reassured the public during the consultation period that the central bank would not monitor or control how individuals spend their money. Furthermore, the proposed digital currency would coexist with physical cash and operate independently of commercial bank accounts. Users would access the currency through digital wallets, payment cards, or mobile apps, with support for offline transactions facilitated by Bluetooth technology.
A complex path forward
Despite the central bank’s assurances, the consultation outcomes indicate a challenging path ahead for introducing a CBDC in New Zealand. The lukewarm response underscores the deep suspicion of CBDCs. As the RBNZ moves forward, it aims to strike a balance between leveraging technological advancements and preserving fundamental values like privacy and autonomy. Whether these efforts will shift public perception remains uncertain, but the central bank has signaled its commitment to addressing the complex issues surrounding the future of digital cash.
This consultation represents a significant step in understanding public attitudes toward digital currencies, providing valuable insights as New Zealand navigates the evolving financial landscape.
