The Reserve Bank wants to know what we think about money. And some pretty big decisions appear to be looming, based on what we say.
Specifically the RBNZ is seeking public views on its newly-acquired role as "steward" of the cash system and also on the possibility - though no timeframes are suggested - of introduction of a digital form of the New Zealand dollar. The bank had earlier indicated it was going to be seeking public views on introducing a digital currency.
It is stressing, however, that it won't be getting rid of cash, as research shows about 6% of the population still depend on cash.
It has issued two "issues papers" for public consultation, with feedback open for 10 weeks, closing at 10am on December 6.
The papers are: The Future of Money – Stewardship and The Future of Money – Central Bank Digital Currency.
In November a third issues paper will be released that will set out the issues facing the cash system and "explore high level options to achieve greater efficiency and resilience".
The RBNZ has now for some time been putting a lot of work into the future of cash, which it is now restyling as the 'future of money'.
Involved in this has been the RBNZ acquiring its 'stewardship' role, which the bank is now elaborating on.
The Reserve Bank of New Zealand Act 2021, (‘the Reserve Bank Act’) was passed by Parliament in August. It recognised the Reserve Bank’s role as overseeing the end-to-end functioning of the cash system, ensuring that cash in New Zealand meets the needs of the public, and monitoring and assessing the impacts of technological innovation in money and payments on the public’s need for cash.
A new department within the RBNZ has been created - the Money and Cash Department – Tari Moni Whai Take – to support the Reserve Bank’s enhanced focus on money and cash issues.
RBNZ Assistant Governor Christian Hawkesby says the bank is seeking public input on how it should perform its role as steward of money and cash, and how it should assess whether to offer central bank money in a digital form alongside cash.
“As steward we want to ensure that our central bank money remains a stable value anchor for the monetary system and available as a fair and equal way to pay and save - so ensuring that New Zealanders have access to money in forms that suit them and their changing needs. These outcomes mean that New Zealand keeps its monetary sovereignty," he says.
On a Central Bank Digital Currency (CBDC), he said this would see the "features and benefits of cash enjoyed in the digital world, working alongside cash and private money held in commercial bank accounts".
"It could make for much more efficient and integrated platforms benefitting individuals and businesses, as well as protecting monetary sovereignty. However, any decision to issue a CBDC would need to carefully consider operational risks, such as cyber security, and impacts on the financial sector," Hawkesby said.
The issues paper on CBDCs seems to clearly favour introduction of an NZ digital currency, but the RBNZ is stressing that work is at a very early stage and much more discussion would be needed. No timeframe has been given - but indications from the language used in the document are that we would be looking at some years ahead.
In the other issues paper, the idea of privately introduced 'stablecoins' is discussed, seemingly with a fairly open mind as to these potentially being useful operating alongside the official currency. The so-called stablecoins are like a type of cryptocurrency, but backed with assets of equal value fiat currency.
The RBNZ cautions that there are various potential problems with them, however.
It was the Facebook-led proposal for a stablecoin, originally called Libra, now called Diem, that provided an extra catalyst for much of the central bank work going on around the world on digital currencies.
But in the meantime, there will still be cash..
"We want people to know that the case for keeping cash is well understood and accepted by the Reserve Bank. Cash is here to stay for as long as some of us need it," Hawkesby said.
51 Comments
The bigger problem is the lack of underwrite - for all currently held digital representations of future purchase expectations. And that's 'already' .
https://surplusenergyeconomics.wordpress.com/professional-area/
Whatever we end up with, has to be compatible with the physical underwrite. Which we are reducing daily.
This is a quantum leap for anyone schooled in economics; I doubt they'll develop something that can resist the breaking wave. As the link says, the next one will be GFCX4. There are only debt-forgiveness, rampant inflation, or collapse as options.
How do your tenants pay your rent if the currency is houses but they don’t own any?
Do all tenants in your world therefore default on all rent payments and therefore make all rental stock worthless because the discounted ‘house flow’ of future earnings from your rental portfolio is zero houses.
The Bank regulator competing in the market with the regulated.
Central Bank doesn't need working capital like commercial banks to create money. Its a plan by all central banks to take over the currency supply and remove commercial banks. Add in vaccine passports and UBI and we have no freedom socially or economically.
Who gets a loan if the banks dissappear I wonder?
George Gammon video is brilliant explains potentially how it could work
But designing CBDC involves curbing its risks. In order to prevent excessive withdrawals of bank deposits, it has been suggested that a cap be placed on the amount of digital euro that each individual can hold. Or that digital euro holdings in excess of a certain limit could be rendered unattractive by applying a penalty interest rate. Link
From the Bank of International Settlements.
Cash is trash: in the sense of all fiat currencies being printed to zero but
Cash is also king: in the sense of paper money that is a bearer instrument that can be transacted peer to peer with no-one surveilling the transaction.
All I can say is thank Satoshi we have a non sovereign store of wealth in Bitcoin.
So gov handed rbnz all this power
wtf??
why do we bother having elected rep or democracy?
Power to the people my arse? Oh have a consultation which rbnz under no obligation to follow. Aren’t elections meant to be a bit larger consultation? Oh now just trust us we are the experts. Bloody cheek
RBNZ sees both opportunities and threats emerging in the monetary system | interest.co.nz
It has actually dropped to about 13%. Also it is mostly old people and government departments such as WINZ that use cash. I guess because the beneficiaries want it in cash.
One of the properties of money is being a medium of exchange that can be used in a transaction between 2 individuals. We dont need to government watching every single transaction.
For NZ to introduce it's digital currency would rank us among world leaders in financial technology. Like when we were among the first to introduce EFT pos. We are a small nation, so we can be more flexible than many. Digital currencies have been around a while, the system is already reliable, tracible and working. Perfect for Govt use.
We already have plenty of payment convenience - any further contribution a CBDC would make is fluff compared to the risk that they would use it as another way to create more currency units to "stimulate the economy" (=inflate asset bubbles)
I'll see if I can make a submission along the lines that if they do create a CBDC it should be guaranteed fixed in supply - no more money printing. But that would basically hamstring Monetary Policy, and there is no way those closest to the spigot will give that up, unfortunately.
I will continue to try to avoid sovereign fiat (regardless of form such as CBDC) - the top dogs can't be trusted with Monetary Policy.
Quoting TIME magazine on the CBDC in the US :
"Banks are centralized middlemen with respect to financial transactions,” Prins, author of Collusion: How Central Bankers Rigged The World, tells TIME. “The more popular cryptocurrency or digital currency becomes, the fewer profits the banking system can reap from traditional services and verification methods that allow them to hold, take or use their customers’ money, and the more financial power they stand to lose as a result".
So, RBNZ is not going to give up easily on the paper currency printing.
Also, what is the technology expertise here to introduce and manage the digigal Kiwidollar ?
RBNZ would better serve NZ sorting out the massive debt mess they've created.
Cutting back on staff that waste taxes trying to further complicate their minds with funny crypto money, when they can't manage legal tender properly.
Rather than create further disaster why don't RBNZ bring NZ back to sound economic fundamentals?
I read 5 years ago that the period between 2020 and 2030 would involve the fastest and most radical changes we have ever seen and that those people not able to keep up would be left behind.
Changes that involve the loss of freedoms of all descriptions, from speech and movement to privacy.
Cash is an important freedom. You are the one in control of your cash and if the power goes down you are still able to use it. The RBNZ is not looking to solve any problems other than being able assure their eventual control over all your money.
These changes are globally synchronized and one feels almost helpless in their implementation. The RBNZ may only be asking the public's opinion for appearances and they (and the govt) will certainly undertake a long public education campaign designed to get everyone on board. The big sell will be "convenience". Plus a big noise about finding covid on banknotes. Just wait and see.
All central banks powers to set interest rates and game the system through asset purchases and sales should be removed. Let markets work, that is their purpose. State sponsored financial stability is an illusion. If businesses are failing (including banks), they should be allowed to fail, the markets purpose is to enable the most efficient providers of goods and services to flourish, whilst flushing out the shit. There is no too big too fail - only good businesses and bad ones. The only really useful functions of a central bank are regulation and physical management of money supply, and frankly regulation would be better handed off to the FMA, since there is less likelyhood of conflicts of interest.
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