The Reserve Bank of New Zealand has initiated discussions about potentially introducing a central bank digital currency (CBDC), a process expected to continue until around 2030.

According to Ian Woolford, the Reserve Bank's money and cash director, ongoing advancements in money and payments pose challenges to New Zealand's monetary sovereignty, prompting the exploration of digital cash.

In a statement released on April 17, the central bank explained that digital cash would coexist alongside physical cash and wouldn't necessitate a commercial bank account for usage, only requiring a digital wallet, payment card, or mobile app. Woolford highlighted that digital cash would offer improvements in privacy, security, and trust for users, stressing that the central bank would not oversee or monitor individuals' spending habits.

Woolford also mentioned that digital cash would incorporate Bluetooth functionality, enabling payments to be made without an internet connection, which could prove beneficial during emergencies or power outages.

The consultation period for refining the high-level design of digital cash will run until July 26, 2024, marking the initial phase of a multi-stage exploration expected to continue until approximately 2030, with ongoing opportunities for public involvement.

The decision to explore digital cash comes after comments from Adrian Orr, the governor of the Reserve Bank of New Zealand, who expressed skepticism about stablecoins during a parliamentary finance committee meeting in February. Orr criticized stablecoins, stating that they cannot replace traditional currency and are inherently unstable.