23 April 20245 minute read

RBNZ consults on issuing digital cash in New Zealand

RBNZ consults on issuing digital cash in New Zealand

The Reserve Bank of New Zealand (RBNZ) – Te Pūtea Matua as part of its multi-stage consultation is seeking public feedback on the issuing government-backed digital currency in New Zealand. The digital cash would exist alongside physical cash and private money as another means for the general public to purchase goods and services.

Submissions close on Friday 26 July 2024.


Features of the digital cash

RBNZ describes the digital cash to be an electronic version of physical cash, both of which represent a direct liability on RBNZ. The digital cash would be denominated in New Zealand dollars and can be swapped 1:1 with physical cash as well as money in your bank account.

Methods of storing and accessing the digital cash would be through smart payment cards, bank accounts and mobile phones.


Who should read and participate in this consultation?

The consultation holds relevance for all stakeholders in the financial services sector. This includes the general public who will be regular users of digital cash. It will also be of particular interest to banks, credit unions and deposit-takers given the potential liquidity challenges stemming from the introduction of digital currency.



In recognising the declining trends in physical cash use, RBNZ’s initial intentions were to broaden central bank money to include a widely available digital form. Since 2021, RBNZ has solicited public feedback on the idea of implementing a central bank digital currency (CBDC). The feedback from the previous consultations was not unfavourable, but submitters have raised concerns about privacy, security and whether digital cash is intended to fully replace physical cash.


What input is sought through the consultation?

RBNZ stated its two main objectives for digital cash.

  1. Ensuring that central bank money is available to New Zealanders and can be used digitally. 
  2. Enable an innovative and competitive money payments system that contributes to the development of New Zealand’s digital economy.

In addition to providing opportunities to support competition and innovation, the Reserve Bank is pointing to the usefulness of digital cash in an emergency, when access to bank accounts is prevented.

To achieve those objectives, RBNZ is seeking further feedback on the following:

  • Digital cash principles – the 6 proposed digital cash principles (Uniform, Universal, Private, Innovative, Reliable & Orderly).
  • Benefits of digital cash – whether digital cash will improve long term innovation and payment reliability in New Zealand.
  • Strategic Design – the role of firms or organisations in the digital cash ecosystem, and what support stakeholders would require from RBNZ.
  • Managed Issuance – potential features of digital cash, for example: interest on digital cash holdings, holding limits or controls on issuance.
Our observations

We are aware that a significant portion of criticism involves concerns that digital cash will replace physical cash. RBNZ has reiterated that the implementation of digital cash is not intended to replace physical cash, and will play a complementary role along with physical cash and reserves to be the three existing forms of central bank money.

Another substantial pushback stems from privacy, anonymity and personal autonomy concerns. Many submitters have raised the importance of transparent and personal oversight over their own money. We welcome the Reserve Bank’s acknowledgement that approach that the design of digital cash must ensure minimal data collection and embed appropriate personal and transactional data governance. It must also provide users with assurance that they have full control over their information, and autonomy in how they choose to store and spend their digital cash.

The Group of Seven Nations (G7 – Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) has previously published public policy principles, seeking to encourage central banks all around the world to consider alternatives to traditional fiat currencies. You can read more about that on our DLA Piper Intelligence publication here: G7 public policy principles for retail central bank digital currencies  DLA Piper Investment Rules of the World.

New Zealand is currently on par with other countries in the global adoption of digital currencies. Countries like Jamaica and the Bahamas have already adopted digital currencies with Central bankers in Brazil, China, Europe and the UK slowly following suit. The Bank of England and HM Treasury are currently exploring the feasibility and potential design choices for the digital pound, whereas the European Central Bank are working with the national central banks of the euro area to look into the possible issuance of a digital euro.


Next Steps

If you have any questions about the consultation, digital cash or cryptoassets, or would like assistance with a submission, please contact us.