The Reserve Bank of New Zealand initiated a fresh consultation phase regarding a central bank digital currency (CBDC) on April 17.

This stage of development seeks feedback on the fundamental design choices for digital currency.

The proposed digital cash would be denominated in New Zealand dollars (NZD) and would be accessible to retail users for exchange into physical cash, bank deposits, and other account balances.

While the Reserve Bank would oversee the issuance of the CBDC, it would not directly distribute the asset to users. Instead, distribution and related services would be managed by the private sector, including banks and payment firms.

Emphasizing privacy, security, and trustworthiness, the Reserve Bank assures that it will not monitor or control users' spending of the CBDC.

Additionally, the CBDC aims to improve financial inclusion, catering to unbanked individuals without requiring a traditional bank account. Offline functionality will be supported for transactions during network outages.

Although private services will conduct identity and compliance checks, the Reserve Bank will not handle identity data directly.

In comparison to other financial technologies like stablecoins and cryptocurrencies, the CBDC is viewed as posing less risk to New Zealand's monetary sovereignty and economy.

The CBDC will also support smart contracts, enabling programmable payments commonly associated with blockchain technology.

Despite ongoing consultations, New Zealand is still in the early stages of CBDC development, with plans extending until 2026 for further design and analysis. Prototyping is scheduled for 2028-2029, with a potential CBDC launch around 2030.