Auckland-based financial services company P^werFinance plans to launch new currency early next year; will later seek banking registration

A new Auckland-based financial services company P^werFinance is planning to launch what it is styling as a "world first" digital version of the New Zealand dollar early next year.

The company, with multi-million dollar backing from several tech investors, is planning to start the currency - which will use distributed ledger technology - in a fairly small way among a group of about half a dozen 'foundation partners' - businesses with large scale asset purchase requirements needing large payments. It will only be used within New Zealand at least initially. It will be a 'tethered' currency backed one-for-one by real NZ dollars held through the IRD's tax pooling system effectively as prepaid tax.

P^werFinance chief executive Dave Corbett, who was previously a banking and capital markets partner at PwC for about 10 years before moving into this venture about two years ago, says the company has been "massively interested in doing the right thing" in regard to regulation and has been in discussion with the Reserve Bank about the development of the currency (which the company will call the P^werDollar) since late last year.

And Corbett confirmed that at some point later - after launching the currency - his company would be seeking to gain registration from the RBNZ as a bank. (Only organisations that gain registration as a bank from the RBNZ may call themselves 'a bank'.)

Central banks around the world have been looking closely at digital currencies and the RBNZ, as issuer of the currency, has its own programme under way looking at the future of the cash system in this country.

Globally, Facebook caused a big stir last year when it announced plans for its own cryptocurrency, 'Libra', which it stated an intention to launch this year. That has not happened. 

Asked for comment on the plans by P^werFinance to launch a digital currency, an RBNZ spokesman said the bank does not comment on engagements or conversations with individual entities, and/or any products or services they might offer.

"Money issued by private firms does not represent central bank issued legal tender money," he said.

"Digital innovation in financial services provides many opportunities for firms, regulators and consumers alike. However, they might also present new risks which should be managed appropriately."

He also suggested people might want to refer to the work the RBNZ is currently doing in financial technology.

“As a New Zealand-owned company, our purpose is enabling local businesses to offer financial services with lower costs, greater transparency and the ability to enhance both customer experience and revenue. We want to make it possible for a diverse range of organisations to offer finance products that align with their brand and values, from businesses to community groups and fintechs.”

It will only be available within New Zealand initially and Corbett says there is "plenty of runway in New Zealand for the time being".

“This is a really great way to have a large scale experiment in New Zealand and it might be the thing that encourages the RBNZ to go ahead and do its own digital currency.”

Corbett said the P^werDollar is ‘smart money’ which means, unlike today’s traditional New Zealand currency, the built-in technology and compliance knows who is holding it, where it has been, where it is going and what contracts and regulations apply to its use, which helps prevent money laundering and fraud.

Using distributed ledger and smart identity technology, all currency holders will have their identities securely verified and transactions recorded.

Corbett said the notation of the company's name with the ^ substituting for an o has several meanings including putting someone into the frame, or as a symbol for exponential growth.

The company issued this media release on Tuesday marking announcement of its plans for the new currency and this company backgrounder.