Digital money would be private but not anonymous like cash, the RBNZ says

Currencies / news

Privacy Act alone not sufficient to meet user privacy expectations for digital cash, Reserve Bank says

19th Apr 24, 12:00pm by Gareth Vaughan

Photo by Dayne Topkin on Unsplash.

Following the requirements of the Privacy Act won't be sufficient to meet user privacy expectations for digital cash, the Reserve Bank (RBNZ) acknowledges.

The RBNZ makes this point in a consultation note released with its new digital cash consultation paper, Designing privacy into digital cash.

The RBNZ on Wednesday issued the consultation paper seeking public feedback on a central bank digital currency (CBDC) to potentially be used by the general public. The RBNZ notes it has still not yet decided whether to issue a CBDC, which it's referring to as "digital cash." This would be a digital version of New Zealand's existing fiat money, the NZ dollar, backed by the Government and representing a direct liability on the RBNZ.

The objectives for digital cash, the RBNZ says, would be; to ensure that central bank money is available to New Zealanders and allow it to be used digitally, and to enable a money and payments system that is innovative, competitive and contributes to the development of NZ’s digital economy.

Ian Woolford, the RBNZ's Director of Money and Cash, told RNZ digital money would be "private not anonymous," unlike cash which is anonymous because "there is no real tracing of it digitally."

The RBNZ says it wouldn't collect transaction data, and there would be rules on how people's information was used by third parties. Any digital cash service provider will give users control and assurance over how their information is collected, stored, used, shared and deleted, with other government agencies such as Police and Inland Revenue required to use legal mechanisms to access any personal or transaction data held in an individual’s device or online wallet.

"The Reserve Bank will collect as little data as possible and won’t be able to see your personal information or how you spent your money. You will have a choice on how your information is used, stored, shared, and deleted," the RBNZ says.

"To the extent that data is collected, the Reserve Bank should apply the principles on collection, retention and use of information set out in the Privacy Act 2020."

"In particular, the Reserve Bank must also consider who holds the data of end users. The data on end users could be held by the Reserve Bank, a digital cash ecosystem service provider, or an independent entity. The Reserve Bank does not have commercial interests in consumer data, but service providers in the digital cash ecosystem may. Establishing information governance policies and monitoring third party adherence to these policies would likely be required," the RBNZ says.

The design of digital cash should establish how transactions will be authorised, whether the user will be identified and what role the RBNZ will play in collecting and accessing personal data. The RBNZ says digital cash design must consider how any Māori data collected would be consented, identified, classified, stored, and made available to iwi and hapū for their use as per the Māori data governance model. And digital cash design must also address concerns about cybersecurity.

"A key conclusion of this note is that adhering to the Privacy Act 2020 will not be sufficient to meet user privacy expectations. Providing for informational privacy will also not be sufficient. The design and governance of digital cash must also provide for a contextual view of privacy," the RBNZ says.

"Specifically, digital cash design should consider how to embed personal autonomy and freedoms into the use of the digital cash."

"In addition, the Reserve Bank should assure people of the privacy protections that it designs into digital cash. The Reserve Bank and third parties should also communicate well with end users, so they understand what information is being collected and how it is being governed and used. The Reserve Bank should also explore the role of third parties and technical solutions in digital cash and its ecosystem," the RBNZ says.

It notes digital cash may need to comply with the Anti-Money Laundering and Countering Financing of Terrorism Act.

The RBNZ's consultation note summarises privacy considerations in Table 1 below.

The RBNZ is seeking submissions by July 26.

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50 Comments

by ShoreThing | 19th Apr 24, 12:17pm 1713485847

Well of course not, that's by design - IRD would love to get their hands on that data. No more cashies, or visits to the tinny house.

by IT GUY | 19th Apr 24, 12:19pm 1713485968

I like cash, it works when the power is out.

by ShoreThing | 19th Apr 24, 12:33pm 1713486792

Me too, but increasingly it doesn't really work. If the register at the grocery doesn't have power, they're just going to close the store. Petrol pumps don't pump when the powers out, so a fistfull of dollars isn't going to get your tank filled.

by pacifica | 19th Apr 24, 1:21pm 1713489706

Food & fuel purchases do still operate though and tills can be opened manually. Checkout operators and businesses already have ways to transact in cash and record purchases that can then be entered into computer systems later. The amazing tech involves these things called pen and paper in case you were not aware of it. Prices already have systems of determination (it is that thing you look at when deciding what to buy, oh a piece of paper & plastic with the price on).

So essential needs to live do still operate. Sure there will be many people, generators & pumps, who cannot physically travel and operate without petrol. However there are reserve supplies for power cuts and delivery services that take cash. Had use of such services when power was out, could not travel the distance and had to get fuel delivered & paid for. It works pretty well and happens all the time across the country (even AA services do this). It costs more then normal pricing but what do you expect for personal fuel deliveries from reserve supplies.

Your failure to consider how we lived and still do live when the power or comms is out makes me feel pity for you. You should upskill to be better prepared. If you struggle to write a receipt practice writing and doing calculations without a calculator.

In Auckland many families and businesses can be without power for over a week. It is frequent enough to have extended power cuts in our largest city & trading economic region. With growing power demands power cuts and brown outs are to be expected to increase in frequency. Add in more weather events and degrading infrastructure (see Aurora down south) and you have the perfect storm for loss of online & power services.

Comms being out happens even more frequently and our mobile service networks are even more patchy and fraught with issues.

by ShoreThing | 19th Apr 24, 1:43pm 1713490987

Normally I just ignore your word salad, but I'll bite this time as you are so hilariously off the mark.

Checkout operators and businesses already have ways to transact in cash and record purchases that can then be entered into computer systems later.

Funnily enough, I am intimately aware of how long supermarkets can trade without a network connection before they have to close their doors. Provided they have on-site generators (most will), they can continue trading for hours by caching transactions, timesheets, deliveries etc locally and syncing up once they come back online. There is a point where they can no longer do this, and at that point they will close. Your inane suggestion that they would write receipts on with pen and paper, and work things out with a calculator, is beyond preposterous and just shows how little you understand of this. Take 5 seconds to think about how many thousands of people will shop at your local Pak & Save every day, and the volume of goods that go in and out of the store, and maybe you'll understand.

You should upskill to be better prepared. If you struggle to write a receipt practice writing and doing calculations without a calculator.

Thanks mate, I could probably bang out a receipt or two if I needed to, but my skills are much better utilised making sure others don't have to.

by ChrisOfNoFame | 19th Apr 24, 2:49pm 1713494943

"I am intimately aware of how long supermarkets can trade without a network connection before they have to close their doors. Provided they have on-site generators (most will), they can continue trading for hours by caching transactions, timesheets, deliveries etc locally and syncing up once they come back online."

Tell me ShoreThing, how many supermarkets have generators large enough to power the whole store while also meeting health and safety requirements?

Take care how you answer. I too am "intimately aware" of how supermarkets (as well as other large FMCG stores in NZ and Oz, and not a few overseas) have architected their systems for their respective business continuity requirements.

And pacifa isn't as wrong as you suggest. You jumped to supermarkets while they were referring to businesses in general who are processing far fewer transactions. (Unless it has changed recently, needing electricity is not a legal requirement for transacting business.)

by pacifica | 19th Apr 24, 1:49pm 1713491378

So both your insurers and employer know about your private purchases (such as medical ones) to deny your other valid insurance claims on the basis of "existing conditions & degeneration" and you can be fired for such as well even if it does not affect your productivity. Gee lets sign you up for that. Or how about insurers raising premiums based on your food purchases and banks denying loans based on what they consider luxuries like vet bills and bed blankets for the cold winter. Yeah what could go wrong.

If you think organizations do not discriminate and consider any living necessity (such as very valid preventative treatment or care of family) a risk then you are very much mistaken. Orgs can and do discriminate in NZ. They discriminate against customers all the time. They discriminate even more against employees; where bullying and constructive dismissal is rife in NZ. Now currently we just have skilled staff leave and bunk to Aus after they burn out or get sick of it. But imagine denying employment & housing on the basis of their private purchasing, denying medical, consumer or house coverage based on private purchasing, denying loans based on purchases for living needs etc. Those are existing issues now and greater tracking information being open to all is actually increasing the discrimination, risk of targeted scams and issues we have already, not reducing them.

Then consider what happens when you have a growing population of dispossessed and deprived people who have little ways to acquire housing and employment and can be legally denied access to buildings, and government services like the disabled already are. Ever ask yourself why more then 50% of disabled people need housing and income support. Its not because employment is so accessible and readily available and landlords can and do discriminate based on financial income & abilities now (even with supposed HRC that is a toothless and vapid "mediator").

by pacifica | 19th Apr 24, 12:28pm 1713486527

I was laughing so hard when they suggested downloads as an option when power and communications goes out. That was the stupidest statement by the RBNZ, right after the comments that digital money would be accessible to people with a range of disabilities. The staff on this project are both technically and medically ignorant to such a degree they should not be employed at the RBNZ and the job losses cannot come soon enough. Not even their website is accessible. It is literally a mess.

by Eschaton | 19th Apr 24, 12:28pm 1713486503

We already have digital currency, most of it is digital. This is a waste of time and resource. Remember RBNZ is essentally just a goverment department, can it really build something better than similar tools that already exist? Yeah nah.

by J.C. | 19th Apr 24, 12:52pm 1713487969

Yes sir. The money supply is wholly digital and comes into existence / is extinguished by keystroke.

by IT GUY | 19th Apr 24, 1:06pm 1713488792

Having access to many bank datacenters over the years , there are no big safes with bearer bonds or cash etc, Your wealth is but 1s and 0s on a network attached storage unit. . But a petrol station pump can run on genset and you can get your $20 of petrol if you have cash, witness the lines at Napier stations during cyclone aftermath. we can never have no cash. Banks have two DCs, for DR they do not consider an attack on both sites.

by J.C. | 19th Apr 24, 1:47pm 1713491244

You seen Civil War yet? I haven't. But I saw the scene when they're negotiating on price at the gas station. Hard money comes into play.

by pacifica | 19th Apr 24, 1:52pm 1713491529

And if we did not have money it would be eggs or lets remember the slogan "gas, grass or ass". Frankly cash trade is preferable... for many additional hygiene based reasons.

by Roelof | 19th Apr 24, 1:52pm 1713491573

Im not sure what the transactional costs of our current forms of digital payments are..?? eg...merchant service fees.

If this new CBDc did away with this layer of fees...than its a good thing....

With our current use of Digital payments.... Big Data is already following us...

I think CBDC might be a good thing..... as long as it is not a step closer to doing away with Cash altogether..?

by miles | 19th Apr 24, 8:53pm 1713516801

CBDC would be a step closer to the end of Cash. As soon as a Govt wants to take control this would allow them to do that. Even with Big Data your current financial transaction are closed loop in that you can see money move from person A to B to C. With CBDC that is part of the program.

by treadlightly | 19th Apr 24, 2:20pm 1713493201

Only banks and others with accounts at the RBNZ can hold digital currency, what the public hold are bank generated deposits and these are not currency.

https://www.rbnz.govt.nz/-/media/518b0156a77949d08cfee13723f98974.ashx

by HistoryRepeats | 19th Apr 24, 12:37pm 1713487048

Just say no to CBDCs. No benefit to us, loads of potential downsides, and the current system works fine. Enough of these media articles trying to soften us up and convince us that it would be "private" and not susceptible to corruption. We don't believe you.

by ShoreThing | 19th Apr 24, 12:47pm 1713487626

Presumably we won't be given the choice. There are plenty of benefits for those that make the decision.

by pacifica | 19th Apr 24, 12:55pm 1713488128

The fact they get paid for this work to roll it out regardless of technical, social and financial issues is shameful and embarrassing enough.

by Pa1nter | 19th Apr 24, 1:11pm 1713489092

Presumably we won't be given the choice

I can envisage it being rolled out en masse in a future crisis.

"Starving? Can't pay bills? Here, try some of our new Digi dollars. All the kids love it!"

by interesting1234 | 22nd Apr 24, 8:19am 1713730777

I'm sure that many would gladly tent up at parliament again to show their disagreement on this subject.

by J.C. | 19th Apr 24, 12:56pm 1713488219

Moving to places such as Florida is potentially one way to distance oneself from central bank overreach. Now, rat poison may not be your cup of tea, but at the very least the community has been advancing these discussions much more than those at the water coolers and neighborhood BBQs.

by Pa1nter | 19th Apr 24, 1:13pm 1713489185

Except the main aim is to treat them like digital pokemon, rather than a genuine medium of exchange.

by J.C. | 19th Apr 24, 1:50pm 1713491450

Except the main aim is to treat them like digital pokemon

CBDCs are not digital Pokemon. Where did you get that idea? If you're referring to BTC protocol ordinals being represented by visual images, even that is not digital Pokemon.

Stay in your lane. If you don't know what your talking about, best to inform yourself first.

by Engineer 11 | 19th Apr 24, 1:01pm 1713488490

CBDCs being rolled out around the world by the globalist elites, a solution to a problem that does not exist. These give zero privacy and total control to the body that issues them. A very bad thing.

by treadlightly | 19th Apr 24, 2:32pm 1713493938

As opposed to to the privately owned banks who create and supply the majority of our money to us and can see everything that we do with it.

by interesting1234 | 22nd Apr 24, 8:22am 1713730936

Yes exactly, but the banks are a level between us and the government, with our infomration only accessible for specific reasons e.g if the police wish to see someone's bank account statements they need to go through the courts to be able to. I'd much rather the banks be that intermediary than have everything in one basket with the government.

by Brutus Iscariot | 19th Apr 24, 1:49pm 1713491373

Cool - so non-Maori get data privacy, but Maori get their financial data handed over to iwi bosses?

by pacifica | 19th Apr 24, 2:04pm 1713492273

Yep unelected nepotistic officials who openly practice enforcing unfair advantage, giving their own family large grants while openly denying access to others, and denying equal returns & voting rights for all iwi members. But you cannot complain about the leaders corruption even if they share equal status to your family because fair rules do not apply to all. Hence the wealthiest iwi with smaller populations also have larger amounts of the poorest people with few rights and opportunities within their own iwi.

Lets not fool ourselves, monarchies and tribal rulers suck in general and disadvantage the populace, denying them voice,denying them fair access and by increasingly corrupt application of rules.

by Takere | 19th Apr 24, 2:04pm 1713492241

Why not make it a peer to peer system with the RBNZ playing a lesser role. Maybe just the regulator? Blockchain it even?

by pacifica | 19th Apr 24, 2:12pm 1713492732

Payments can be peer to peer now. Adding blockchain does nothing to improve the system, especially during key points, but it does offer a massive security hole you cannot plug with all the computing power in NZ. https://xkcd.com/2030/

Saying blockchain is saying you want an inefficient, less secure data storage, that takes 100times longer to process and immediately presents more hacking and scam opportunities, with few ways to return stolen funds.

by ChrisOfNoFame | 19th Apr 24, 3:03pm 1713495798

"Payments can be peer to peer now."

Which ones were you referring to that the average Joe could use?

by Colonial Viper | 19th Apr 24, 9:03pm 1713517437

Open Banking is where it is at.

by interesting1234 | 19th Apr 24, 2:58pm 1713495499

there would be rules on how people's information was used by third parties. Any digital cash service provider will give users control and assurance over how their information is collected, stored, used, shared and deleted, with other government agencies such as Police and Inland Revenue required to use legal mechanisms to access any personal or transaction data held in an individual’s device or online wallet.

There were rules in place in Canada also before Trudeau locked peoples bank accounts for exercising their right to protest as well. We have seen what can happen with digital access to money when push comes to shove, which is precisely why people hold value in cash and the freedom to spend it how they wish without ledgers of transactions that others can access and use for nefarious reasons - despite rules being in place. As mentioned previously, your personal information has value and we should all be aware and careful of whom we share it with. Would the police need a court ordered warrant to be able to access someone's digital cash account and check their transactions as is with banking currently?

by alphabeatrium | 19th Apr 24, 3:14pm 1713496461

Frankly I would never trust this. If I could be paid in physical cash, I would.

by kiwikidsnz | 19th Apr 24, 6:20pm 1713507637

You can be, unless you agree otherwise.

https://www.legislation.govt.nz/act/public/1983/0143/latest/DLM74808.ht…

by Pagz | 19th Apr 24, 3:17pm 1713496648

I don't think we will have much choice, as energy is rationed on the way down it will be a means of social stability...until it isn't.

by Rampart | 19th Apr 24, 5:24pm 1713504253

Resist, refuse CBDC at all costs. No matter how genuine the reasoning is to implement them may be. End game is total control. Government thinks you’ve used up your carbon credits for the year? No flight to Bali for you this year. You’ve eaten too many steaks this week, you’ll be declined at the butcher.

Maybe I’m paranoid but once this genie is out the bottle it opens up to totalitarianism. It is the end game.

https://open.spotify.com/episode/3t23zMhLGuB57mbWjMIuVh?si=9DcjP2RWQk6s…

by Corrupt Practice | 19th Apr 24, 5:44pm 1713505491

Maori are specifically mentioned for what reason?

by kiwikidsnz | 19th Apr 24, 6:24pm 1713507866

"The RBNZ says digital cash design must consider how any Māori data collected would be consented, identified, classified, stored, and made available to iwi and hapū for their use as per the Māori data governance model."

Who knew?

by Colonial Viper | 19th Apr 24, 9:03pm 1713517397

Imagine a Government Digital Currency which would not just automatically stop you from transacting if you were in an unauthorised location during lockdown or if you were trying to pay for a meal in a restaurant that you could not legitimately be in because you hadn't taken your third booster, but would also automatically trigger authorities awareness of your misdemeanour. This is going to be a great future.

by AncientCompass | 19th Apr 24, 9:35pm 1713519341

I don't understand...

Isn't this just EFTPOS?

by treadlightly | 19th Apr 24, 10:03pm 1713520997

Eftpos is bank created aka broad money while currency is government created aka base money. Banks can default on their money and it is then lost as in the 2008 GFC but the governments currency is much more secure and also only governments have the capacity to bail out failed banks.

by Colonial Viper | 21st Apr 24, 5:22pm 1713676925

Do you really think that all this effort is being put into central bank digital currencies by policy makers just to recreate EFTPOS? Seriously.

by 09BTCer | 20th Apr 24, 6:41pm 1713595306

Control plain and simple.

Anyone with a brain will oppose this.

by fat pat | 21st Apr 24, 10:35am 1713652502

So I just donated $100 to Reality Check Radio the other day. In a world of CBDCs my transaction would have been blocked. We know that because of Justin Trudeau’s despotic reign in Canada where they went after anyone donating to the trucking convoy a few years ago. We've currently got the government funded GDI (global disinformation index) acting as a sinister mainstream orthodoxy enforcing body, and that's heavily government funded. We've got CodaStory which has a similar agenda with CIA origins. The authorities are certainly increasing their efforts to suppress free speech. There is ample evidence showing that this new power will be abused.

by treadlightly | 21st Apr 24, 10:48am 1713653329

Unless you paid the $100 with cash your donation was made by using commercial bank created money and digital currency will not do away with this, its only an alternative to using cash. https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creati…

by Colonial Viper | 21st Apr 24, 5:19pm 1713676789

For some reason you did not address at all the point about CBDCs being used to enforce government policies including the blocking or banning protestors and opposition movements.

by The_Golem | 21st Apr 24, 10:24am 1713651840

This looks like a solution to a problem that doesn't exist other than in the minds of bank strategists who want to remove or externalise their current costs of cash handling and get rid of something that can't be monitored. So, we're expected to:

Trust the RBNZ and others won't monetise even more of our transaction details.
Be prepared to surrender the privacy the anonymity of cash brings. "Private but not anonymous": seriously?
Take it on faith that the organisations who will process the transactions won't gouge: is anyone willingly paying 50 cents to use a card for a three dollar parking meter payment, when a few coins are so much simpler?
Believe that digital currency can be made secure in light of the billions being stolen by digital currency hacking, or lost to our own personal errors.
Credit that the infrastructure will work and won't add costs - a big leap of faith in light of how badly we run infrastructure, and how immune to things like power and data outages cash is.

by ShoeboxCharlie | 22nd Apr 24, 9:37am 1713735442

I tried to complete the RBNZ survey. The survey is completely biased towards supporting CBDC, with the exception of a couple of security questions. One of the interesting questions reads as follows:

13. Do you think digital cash can:

Improve or worsen digital financial inclusion?

Options for answers Likely, Not likely, Don't know.

I am bewildered at how to answer this question. I am open to suggestions from the vast resource of knowledge that follow this website for assistance.