The Reserve Bank of New Zealand’s public consultation on digital currency has garnered a lackluster response, as respondents have expressed concerns regarding state control and privacy.
On December 10, the Reserve Bank of New Zealand (RBNZ) disclosed the results of its most recent public consultation regarding a prospective central bank digital currency (CBDC), which indicated a high level of skepticism.
The consultation, which was conducted from April to July 2024, sought opinions on the necessity of a CBDC for the economy of New Zealand. It collected feedback from 18,000 survey responses and 500 written submissions.
The consultation results indicated that only 16% of respondents supported the RBNZ’s decision to establish a CBDC in order to guarantee access to central bank money in digital form and facilitate innovation in the New Zealand economy.
The respondents identified privacy and security concerns as their primary concerns. A substantial ninety percent of respondents expressed concerns regarding government overreach, with a particular emphasis on financial surveillance.
A significant number of respondents expressed concern regarding the potential for data misuse in CBDCs. One participant cautioned, “Even if not currently intended for intrusive purposes, a CBDC could develop into a tool for monitoring financial behavior.”
The majority of respondents expressed that they do not perceive a necessity for features such as automated payments and real-time balance updates, with 65% of respondents disregarding these capabilities.
Respondents also pointed out the benefits of cryptocurrencies such as Bitcoin and Ethereum, which they perceive as providing superior privacy and decentralization.
Although some participants viewed stablecoins as a viable alternative, RBNZ Governor Adrian Orr criticized this viewpoint, stating that they are “inherently unstable and not a viable replacement for traditional currency.”
The RBNZ has recognized public apprehensions, emphasizing that privacy and autonomy will be the primary areas of focus in the future. In order to resolve these concerns, the central bank intends to investigate legislative and technological solutions. The RBNZ stated that these issues will serve as the foundation of our end-user strategy.
In 2024, Director Ian Woolford assured citizens that “the central bank will not control or observe how you spend your money.” He clarified that digital currency would coexist with physical cash and facilitate offline payments through digital wallets, cards, or mobile applications.
The consultation results are in the midst of a global debate among central banks regarding the function of CBDCs in their respective economies. In contrast to New Zealand, countries such as China have advanced with digital currency pilot programs.
Nevertheless, the user base of prominent payment platforms such as Alipay and WeChat Pay has proven to be a significant obstacle to widespread adoption in China, making it challenging for consumers to transition to the state-backed currency.
The global decline in enthusiasm for CBDCs among central banks provides context for New Zealand’s skepticism. In 2024, the Official Monetary and Financial Institutions Forum (OMFIF) conducted a survey that revealed that only 13% of central bankers supported CBDCs as a solution, a substantial decrease from the 31% who supported them in 2023.
In contrast, a significant number of individuals prefer to interlink immediate payment systems, such as the U.S. FedNow, which is indicative of a broader global apprehension regarding digital currencies.
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