The Reserve Bank of New Zealand (RBNZ) has published a functional paper describing its views on central bank digital currencies (CBDC).
The document describes the objectives and design of the CBD and the potential benefits and risks associated with it. The Bank will request comments on the proposed document until December 6.
The document focuses on a “general purpose” CBDC, a digital currency issued to “any person or entity that wishes to use it.”
The Reserve Bank of New Zealand wrote: “Such a ‘global’ central bank digital currency would be closer to cash in operation and more suited to fulfilling the role of central bank money than ‘wholesale’ central bank coins.”
The central bank has confirmed that a potential New Zealand digital currency will be digital money issued by the bank along with cash. While the volume of cash in circulation in New Zealand is increasing, it remains “relatively less used in transactions by most people,” according to the notes.
We want people to know that the need to hold cash is well understood and accepted by the Reserve Bank. Christian Huckbe, assistant governor of the Reserve Bank of New Zealand, says cash is here to stay for as long as any of us need it.
The document also defines two main architectures for CBDC technology, including compute-based CBDCs, which rely on traditional account-based structures, and token-based CBDCs, which are powered by new technologies such as blockchain and the public domain. Secret key. encryption.
According to the Reserve Bank of New Zealand, a token-based CBDC can enable automatic execution of certain actions, such as paying rent or paying bills, through smart contracts, thus reducing the need for manual or third party intervention. The bank added that a digital currency based on digital currency could also support the development of new retail services.
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The central bank also said the proposed central bank provides an opportunity to develop a form of money that balances the interests of privacy and traceability. “Users may wish to maintain strict confidentiality when conducting transactions for legal or illegal reasons. In the meantime, government agencies may retain some traceability of CBI’s CBD balances or tokens to reduce tax evasion or avoidance, as well as laundering Money and Terrorism Financing,” Reserve Bank of New Zealand.
The Reserve Bank of New Zealand has officially announced its plans to begin public consultations on the CBD in July. Huxby said last year that New Zealand was “not planning any time soon” for a CBD.