Christian Hawkesby stands as the Assistant Governor for the Reserve Bank of New Zealand, and made a speech today regarding the research of central bank digital currencies (CBDCs). As it stands now, Hawkesby made it clear that there are no immediate plans in place to launch such a centralized, state-issued digital currency in New Zealand.
Major Players Taking Keen Interest In CBDCs
Hawkesby highlighted the array of high-leveled challenges and benefits that can come from a CBDC, doing so during the Royal Numismatic Society of New Zealand’s annual conference. One of the key perks, as highlighted by Hawkesby, is the promotion of financial inclusion and increased access to cash in general.
New Zealand, in particular, has been investigating the possibility of CBDCs since at least 2018. Back then, the country had published a bulletin with the title: “The pros and cons of issuing a central bank digital currency.” Back in January, the Bank for International Settlements (BIS) showed in a report that over 80% of the central banks of the world are currently investigating CBDCs.
Many Reasons Why CBDCs Are Being Adopted
Hawkesby summarized in his speech today the findings BIS had made regarding why countries are investigating CBDCs, to begin with. The BIS had concluded there was an overall sense that both foreign and private currencies are becoming more prevalent. This comes alongside the fact that overreliance on physical cash during a time of declining use of it could potentially leave many people stranded outside the world’s financial system.
While most of the world is currently investigating CBDCs, the majority of them, New Zealand included, won’t be issuing them any time soon. Alongside this, it needs to be considered that a CBDC can take on a number of forms, with bank proposals rarely even describing them as “cryptocurrencies.” Even so, the majority of these proposals use decentralized ledger technology as its inspiration
The Heavy Players In The Ring
China stands as the biggest player when it comes to the technology, at least for the time being, and boasts a large-scale CBDC program currently being trialed at a significant scale in Shenzhen. The Bahamas aren’t that far off, either, as it plans a nationwide release of its own CBDC, the Sand dollar, this week. Alongside this, The Marshall Islands’ fully-fledged cryptocurrency, as well as Cambodia’s quasi-crypto, is under consideration by their respective governments.
As for New Zealand’s ambition regarding CBDCs, in particular, the country wants to create a digital form of cash. Hawkesby highlighted the declining use of cash within the country, thus depriving access to it, as well. Hawkesby stated that only 7% to 9% of the entire country leverages banknotes as liquid money, with only 6% of all New Zealand citizens relying on cash for day-to-day needs.