The Reserve Bank (RBNZ) received record response to its public consultation on digital cash but the feedback was overwhelmingly negative, with more than 70% saying digital cash was "not important" to them.
Across 500 written submissions and 18,000 survey responses, members of the public expressed concerns over the privacy and security of a central bank payment method and saw little need for it in their own lives.
More than 80% of survey respondents said they did not agree with RBNZ’s reasons for investigating digital cash, which were to ensure fiat money was available digitally and that payments systems were innovative and competitive.
Just over 10% of respondents said it was important to have cash in a digital form. Adding insult to injury, only a slim majority said it was important to have any form of central bank money in the first place.
If digital cash was developed, people mostly wanted it to be free from government control, able to be used without power or internet, and not have any transaction fees.
When asked what security features would appeal, the currency being backed by the Reserve Bank ranked below offline capability, as well as cyber, fraud, and personal data protection.
The survey found the public thought a hypothetical digital cash product would be less safe than bank deposits, non-bank money, and even stablecoins or cryptocurrencies.
When asked which features of digital cash appealed the most, 65% answered “none of the above”. Other options included real time information about balances, automated payments, and instantaneous transfers.
Despite this brutal feedback, Ian Woolford, RBNZ’s director of money and cash, remained upbeat about the response and planned to continue work designing a central bank currency.
“The way I’d put it is that we are not discouraged. The big themes are things that we also care about,” he told reporters. “It is a bit disappointing that we haven't been able to articulate in a way that's really resonating for people.
“Only 16% of people said they agree with our reasons for digital cash, and trying to disentangle that is something that we'll be really working on over future public engagements”.
Woolford said he did not see the response as being overwhelmingly negative, only that people had a number of concerns and needed to see “more meat on the bones” of the idea.
“It's a bit of a tired old cliche, but it's the Henry Ford quote: if you ask people what they wanted, they wanted a faster horse,” he said. Digital cash might be something people don't necessarily recognize they want until it is made available to them.
But the RBNZ wouldn’t be “beating it into” the public, instead it would use this consultation to understand and address public concerns.
One of the key concerns was that people wanted digital cash to be private and not able to be used by the government to track or control their spending.
Woolford said it was possible to replicate physical cash in most ways. Transactions could be made instantaneously, peer-to-peer, for free, and without network connection. However, they could never be completely anonymous like physical cash.
This is because digital payments necessarily create a data record of transactions. This record can be kept private and secure but not completely erased or anonymised like physical cash.
When Bitcoin was first being introduced, many were drawn to it as an anonymous form of payment. However, it has since become clear that transactions are extremely public and easy to track due to the public nature of blockchain technology.
Perhaps ironically, central bank cash could be designed to provide users with much more privacy than Bitcoin or other blockchain payments.
Digital cash transfers could look to a user like Apple Pay, where you tap your phone or device to make a payment, except there would be no need to be online or any credit involved. The ‘cash’ could be stored locally on the device and transferred via radio signal to another.
This means transfers would still work in the aftermath of a natural disaster which knocks out the power grid, or in places without cellphone reception. The payment would also be instantaneous, like handing over a note, unlike bank transfers which can take hours.
Smartphones obviously require electricity to function, but it would be possible to store digital cash on other devices which don’t need much, or any, battery charging.
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When Bitcoin was first being introduced, many were drawn to it as an anonymous form of payment. However, it has since become clear that transactions are extremely public and easy to track due to the public nature of blockchain technology.
I disagree. The early adopters of ratty were not about anonymity, but more about the promise of the transfer of value across a network without the need for a centralized middleman. They knew very well that the blockchain protocol is essentially a record of all transactions. Satoshi itself was very public about identifying a public address. In terms of payment, many using Silk Road thought they were making / receiving payments anonymously. But they were less concerned about the BTC protocol itself.
True, BTC had predecessors incl eCash, B-money, Bit Gold, and Hashcash. But all failed.
BTC's design consciously tried to improve on the failures of the predecessors. Some were owned by companies that failed, so BTC was big on decentralization and ability for all to validate transactions to avoid fraud.
More than 80% of survey respondents said they did not agree with RBNZ’s reasons for investigating digital cash, which were to ensure fiat money was available digitally and that payments systems were innovative and competitive.
Fiat money is digitally available and the primary method of transactions is digital. The RBNZ needs to explain to people what problem their digital cash solves. If they can't do that, people can't really make a value judgement.
It doesn't if it's the same thinking behind it.
CBDC is the same product, as is crypto, with fancy labels. The issue is obviously who controls it, who owns it. Bitcoin is being taken over by the financial institutions, and only becoming another speculative financial asset, another Ponzi. It does nothing for the masses. Look at the Hawk tuah meme coin and the rest of them. They're all get rich quick novelties, and we wonder at anaemic economic growth and productivity.
FinTechs offering the same services that already exist. Just another ticket clipper with initial capital provided by dodgy financial traders and grifters lol.
They don't change anything. Excess money chasing the dregs. It's not an overhaul or redesign. It's a fixation on technology for the sake of technology. What are we actually using block chain for? Let's discuss the merits of that and how it'll improve the economy, society or whatever.
Ticket clippers and middle men is how everything works. Why are we only concerned about these particular ones?
Concerns about money laundering, privacy and anonymity. Yet we put everything onto the internet. Our technology tracks and listens to us every moment, invades our privacy every moment. Anonymity - what are we afraid of people knowing - only solution would be to isolate in a cave. As for money laundering - credit creation is the biggest fraud.
"All our money is already digital."
This is true.
But the 'network' of players involved in every transaction have organized the whole system so they clip the ticket at numerous points - often you don't even realize they're doing it.
A brand new digital currency could travel from one party to the other by bypassing the established status quo ... with near-zero ticket clipping. (Looking at you Visa et al.)
“The way I’d put it is that we are not discouraged. The big themes are things that we also care about,” he told reporters. “It is a bit disappointing that we haven't been able to articulate in a way that's really resonating for people."
In other words: "We don't actually care what the public think, the consultation was a PR exercise. We've already decided we're doing it."
And they will, for all the same reasons that the public are concerned about.
The economic super organism and its minions have already decided how best to expand into every possible niche. You wil accept what's dished up, it's just a matter of when. It's why we are having transgenics stuffed down our throat and zero action on frying the planet. One is about increasing control, the other is an impediment to the organisms growth. You will have digital credits awarded for being compliant and they will be removed if you are non compliant. Functioning without the credits will be impossible.
The super organism no longer serves humanity, we serve it! Although this has been the case for some time, the vice is being tightened and being able to live outside the system is becoming increasingly non optional.
Well as it turns out, reading the room was quite interesting. Essentially a big thumbs down to a CBDC is also a thumbs down to Bitcoin and every other Crypto. To be honest I was quite surprised, perhaps there is quite a bit of dodgy shit going on out there and cash is king after all.
I responded to this and highlighted exactly these concerns. CBDC's may as well be called "Surveillance but you can buy a pie with it".
I'll stick with crypto, thanks.
Re anonymity with Bitcoin: big depends. There are many services such as coinjoin which preserve privacy. These are known as "mixing" services. Which, of course, are being made illegal due to "terrorism". So you know they work.
To any readers you should be aware that interest.co.nz has a very slanted and not particularly well-informed commentary on crypto (including, perhaps especially, amongst the commenters). This is not the place to learn about the most important development in finance for at least 150 years. Mainly about arguing about housing.
I'd avoid Breedlove completely, way too much of a kook. Definition of a dimwitted crypto bro imho.
Safedeen has some good points in his stuff but also makes some major leaps that aren't really supported by evidence (an example being he is convinced that the loss of sound money led to a decline in the quality of art which is both subjective in terms of whether art has "declined" as well as the causation shown being non-existent).
Andreas rubs people the wrong way due to style but a lot of good content there, especially his older stuff.
All 3 have an unfortunate tendency to massively overindulge conspiracy type thinking when it isn't necessary to justify crypto.
I thought our resident experts could put aside their smugness for a moment, and maybe contribute a bespoke article on the topic of Cryptos for the benefit of regular interest.co readers.
But as usual, "*pfft* do your own research bro". "Go read/watch this dude and that dude" which is then followed by one of our Crypto Bro's objecting to those suggestions.
I'd ignore Eschaton honestly, crypto is an area that has a severe 80/20 problem. 80% of the people involved are idiots, 20% are some of the most intelligent and competent people you will meet in their respective fields (even if amateurs).
What exactly would like to know about crypto? Is your interest more in how it works technically and what it can do that tradFi can't, or where it's proponents think it fits into the current and future financial system (and why)?
I guess one big thought off the top of my head would be:
- If Bitcoin were to go mainstream/legal tender, how would you protect the privacy of your collection? Since it's a public ledger, once you start spending Bitcoin your identity is at risk of being linked to your wallet address. You might just use a front end wallet for payment, but someone could generate an AI tool (probably already exists?) that analyses all linked wallets/payments and determines a pattern.
- While those wallets wouldn't necessarily be identified as yours, someone that sees a payment come from cold wallet that has had substantial sums transferred to it in the past, might assume you or someone you know is holding a significant sum of wealth.
- And then they find out where you live......Might be from the $200 bottle of Glenfiddich you bought and showed ID for at the bottle shop.
Yeah, tools like CoinJoin exist but are they a) fool proof and b) practical to use day to day?
a) Yes. Or at least make tracking transactions become so onerous that it is near impossible without vastly more effort on the side of the person attempting the tracking. So major resources would need to be deployed with a solid intent.
b) Yes. They can be built into tools so they happen behind the scenes without users needing to change behaviours or understand what is going on. Samourai Wallet offered these services and was shutdown for providing these services. Samourai Wallet Shutdown: A Harbinger for Privacy Tools? – Incognito Browser
Important to note that the recent overturning of a case against Tornado Cash ( a similar service) has just been overturned in the USA due to "overreach" by the LEO involved. So there may be major changes in the works here.
Only if they require regular BMI data to be updated. And programmed to only allow purchases of 1 x 6-pack of beer per week. Lord Orr and the pointy heads need to stay in their lane when it comes to the social contract. They're no more special than us in a just world.
The masses can't see the real world either when their truth comes from those above.
Remember, only last week Lord Orr was shaking his head at the hoi polloi specu-punting on houses. Almost like he was completely absolving himself and the retail banks for having any part in enabling it.
The masses seem pretty quiet about what he said. Surely they should be holding him to account given the central banks' role in the price of debt servicing.
Did the RBNZ make and approve the loans?
They can be accused of poor psychological analysis by inferring that interest rates would remain low, perhaps even go negative but the resulting behaviours are down to the borrowers and banks that enabled them.
It is the banks that are supposed to manage risk....we should have stopped backstopping their poor decision making years ago.
They can be accused of poor psychological analysis by inferring that interest rates would remain low, perhaps even go negative but the resulting behaviours are down to the borrowers and banks that enabled them
It is my view that central banks' want / need to influence behaviors. While that is not explicitly stated in their mandate, that is what I believe. Because ultimately if individuals do not respond to monetary settings, the economy goes to seed. Make sense?
It is the banks that are supposed to manage risk
So why do central banks initiate actions such as FLP and BTFP?
"So why do central banks initiate actions such as FLP and BTFP? "
Because they are concerned that banks are failing in their role.
But the real villains in the mix are the politicians who bend over for the banks....I asked earlier if banks control migration?...they cannot control outward migration but they certainly have the ear of governments that control inward migration.
What is the primary role of our central bank?...financial stability, so yes you could argue that they are responsible for risk management, but they do not make the day to day decisions that impact that stability....they are a governance body, not management.
As stated it is the politicians who enable the banks to continue risky practice through their policies....the RBNZ has to deal with what they are given with a (very) limited toolkit.
Remembering that the RBNZ Governor is appointed by politicians and that our (major) banks are all offshore based.... there are reasons why that is the case...whether they are good reasons is up for debate, and the justifications may change as the global situation does.
The banks have seen how the previous govt (think buyouts for cyclone gabrielle) and RBNZ have responded to shocks, and they now know they can offload risk to them claiming too big to fail. Herein lies the real risk as banks inherently get an appetite for greater risk for profit and the taxpayer is the backstop.
My take from looking into bitcoin, is that the reason the banks (and every one else) are chasing risks for returns is because our money is devaluing over time, so we cannot save above inflation(which is grossly under reported). Inflation (mostly) related to the fact NZ dollar is infinite and it's printed on demand when debt is created. It is backed only by the reputation of our country, nothing tangable. Many bitcoiners beleive that moving to a sound money system backed by something tangable and scarce, would mean that the money would go up in value due to it's scarcity. This would preserve wealth overtime without having to chase risk for returns.
Because they are concerned that banks are failing in their role
Or is it blame shifting and scapegoating because they've already failed in their role?
The banks role is to lend as much as possible, preferably at the lowest risk possible, and they've had a government and RBNZ guarantee to do so.
I may be being generous in my apportioning of blame with regard to the RBNZ, but they are a reactive organisation whereas it is the policy makers (government) that have the ability to set the incentives for behaviours within the economy.
Monetary policy should work in conjunction with fiscal policy not in reaction to it....and belatedly at that.
It is often noted how vulnerable NZ's small economy is to global trends and that applies equally to financial services....we may not be able to change the world but we could improve our own performance within those constraints considerably.
Both institutions (govt. and RBNZ) have failed financial stability. What does it even mean? Is it for the benefit of the everyday person or for the institutions?
RBNZ are the policy makers and have been at the forefront of setting the incentives for people's behaviour when it comes to borrow and spend, the wealth effect, and inflation. Then they have to react to their own misguided actions.
When it comes to fiscal and monetary policy, neither the left or right hand is capable of working in conjunction. Monetary policy is more make believe than economic policy. We saw that with the RBNZ'S reaction to covid. They had no clue, encouraging lending and demand in a supply shock.
Governments are merely puppets chasing power and rule, and purely reactionary. Most politicians aren't qualified to run their respective portfolios. Some have better intentions than others but they're all still trapped by conditioned beliefs. Most wouldn't have a clue about economics, having been fed most of their lives by academics and media.
Too late now, but how exactly did Rogernomics, Reaganomics, and Thatchernomics all get rolled out together?
It's not even about global trends. It's about collusion and narratives being dictated by others. Think Davos and the WEF. The financial industry, mainstream economists, the global media have inserted their jargon into the collective thinking. Financial services don't care about you, only what they can extract from you. People are merely pawns in a giant game of chess.
Think we can make improvements in our little corner of the world when our only concerns are house prices, interest rates and tax? What can I get, rather than, what can I give.
It is the banks that are supposed to manage risk....we should have stopped backstopping their poor decision making years ago.
The banks assumed prior to the GFC that governments would not allow systemically important banks to fail and take down the entire economy with them and understood, no doubt with a wink and a nod, that they would be backstopped to the hilt. They were correct of course. They acted accordingly then and they continue to act accordingly now.
The masses can't see the real world either when their truth comes from those above.
Precisely, this is what the elite want as it keeps the system goin that favours them most. An interesting thought is if the masses understood the core issue of this, but then the counter question is, would they have the balls to unite and demand change, or would they cower with the thought of change?
I had the question many years ago, when I realised the many can only be ruled by the few, via fear. Divide and conquer has been an effective tool throughout history, and been used very successfully the past few years.
Asked it again only last night to my 75 year old father, comfortably retired. We have the numbers to rise up and demand change, what is the fear holding us back?
Is it the Plato's cave analogy? Is it that we're "happy" or ignorant in our comfort zones? What do we fear to lose? Is it a fear that everything we've been led to believe is a lie, and we'd rather not know? What change do we demand, if we're not willing to change first?
Ignorance is bliss. "You want the truth, you can't handle the truth!" :)
Would you be happy if (hypothetically), the 'value' of 1 bitcoin went back to '1' USD, and the whole world adopted it at once? Therefore everybody gaining equal advantage of the blockchain technology and shared ledgers etc? A truly democratic marvel of monetary outcomes?
You already know this, or haven't thought one step ahead. But the whole world adopting something worth only 21 million dollars is completely usless, you can't even buy some properties down the road from me with that. Even now at 2T it's still a tiny asset class. The higher the price gets the more useful it gets for everyone. Bigger players can get involved which then makes it larger again. The risk for them lessens as the price climbs, it doesn't increase.
Most people here will already know this but digital cash can easily be made conditional and part of a social credit scoring system. For instance, if you have already exceeded your carbon credits for the month, you could be blocked from buying any more petrol or diesel at the service station. The list of government enforcement use-cases is endless. No wonder the authorities are so keen on it.
Yes. The U.S. Treasury Department has confirmed that traditional cash continues to be the primary tool for laundering money, with criminals frequently utilizing established methods such as banks and money transmitters. In its 2024 National Money Laundering Risk Assessment, officials noted that while digital assets pose growing threats, cash is still favored by many criminals for its simplicity and widespread acceptance.
https://home.treasury.gov/system/files/136/2024-National-Money-Launderi…
The Travel Rule in the context of crypto is a regulatory framework aimed at enhancing transparency and security in digital asset transactions. It is primarily associated with the Financial Action Task Force (FATF) Recommendation 16, which was expanded in 2019 to include virtual assets and their service providers (VASPs) - Japan was the frontrunner. This rule mandates that businesses involved in cryptocurrency transactions must collect, verify, and share specific information about the sender and recipient of crypto transfers.
For ex, on Japanese crypto exchange Bitbank, a corporate or individual user must verify where crypto tokens are coming from into and out of the exchange before those tokens can be rec'd or sent.
For transactions that occur entirely between unhosted wallets (self-custody wallets) without any intermediary or regulated entity, the Travel Rule does not apply. These types of transactions are considered private and do not require the sharing of personal information under the current regulations.
Thank you, J.C.
Still waiting Eschaton. I can wait ...
(FYI for those who don't know what a self-custody wallet is: Bitcoin.com: What's a self-custodial wallet?)
The great 17th century English lexicographer, Samuel Johnson, found himself disputing with a Bishop Berkeley about whether matter actually existed in our universe. Berkeley had written a treatise claiming matter didn't exist. To prove that matter did indeed exist Johnson walked over to a nearby boulder and started kicking it so hard that he soon rebounded and fell backwards onto the ground exclaiming of Berkeley's theory that "I refute it thus".
And so with crypto-currency, Bit Coin, and the like: I have a nephew who often crows about the fortune he has amassed in Bit Coin. We recently agreed to meet up at a local cafe for a pre-Christmas catch-up. Inevitably, the conversation there turned to Bit Coin. I suggested that with his Bit Coin fortune he could use an infinitesimal part of it to pay for the coffees and cake. In fact, I offered to reimburse him double the amount of the bill in common currency if he first paid it in Bit Coin. After a stony silence I added: "I refute Bit Coin thus."
The CBDC's and/or Government approved stable-coins on offer will likely be built on a pre-mined, centralized, programable money and will potentially be linked to your social credit score, location, spending habits and other mandates.
Bitcoin is the opposite and will provide freedom and options but only if stored and secured correctly in self custody as a bearer asset. Decentralized, proof of work monetary protocol and network with a finite supply verified and secured by a global network of node operators and miners.
Suggest reading 'The Bitcoin Standard' by Saifedean Ammous or 'Broken Money' by Lyn Alden.
The simple answer is cash can change hands many times before it hits anything electronic that could tag it...currently, so not really traceable.
Honestly spend 2 hours and listen to episode 2237 of Joe Rogan - https://www.youtube.com/watch?v=rrJhQpvlkLA and see if you feel the same about conspiracy theories. The level of global narative control is mind blowing.
So: while potential system mandatory-users hate the idea, the RBNZ is going to keep spending our money to develop a solution that will solve a problem that exists only in the minds of bankers and the more control-freak elements of government.
Do you trust either of those groups?
The survey looks like it might have been an attempt at Astroturfing that went badly wrong - but it's going to be ignored, anyway.
Resistance Organisations:
Keep Cash -
https://www.facebook.com/groups/kpcash/
And National Seniors Australia - https://nationalseniors.com.au/news/latest-news/people-power-preserves-… - who are trying to avoid older Australians being marginalised by the charge towards digital currency.
According to friends who do things like write software for banks and security systems: digital cash isn't secure enough that they'd want to use it for everyday applications.
While Crypto Currency is a speculative and highly volatile asset class, those characteristics are what makes it essentially useless as a stable medium of exchange for everyday purposes.
Rather at odds with the function the RBNZ wants to promote via a digital currency.
First Bitcoin not crypto, big difference.
Second, when you monetize an object in real time from an initial value of $0, the path to a multi Trillion dollar market cap will not be a straight line.
But as the value increases, volatility will decrease.
Currently the trade off in lost future purchasing power does not outweigh the ability to use it as a day to day medium of exchange.
But as the market cap increases, and the price is closer to a million US fiat dollars, the volatility will be close enough to zero, and the further upside will have reduced, that it would now be worth using as a day to day medium of exchange.
You are looking at a network now and think that it will have the same characteristics 10-20 years in the future when its market cap is 10-20x larger.
If you want to hear some good discussion on this topic I suggest listening to 'the everyday investor' podcast, with Jodie Bruning, she has also written a white paper on this topic which can be found here https://psgr.org.nz/component/jdownloads/send/1-root/137-2024-cbdc-pape…
If the paper it too long have a listen to the podcast, it covers the fact that our central bank is being informed by the world central bank and the fact that they could have control over our CBDC, and how much control this would give the central bank. the CBDC's programability is a key concern and just letting them have that power even if they pinky promise not use it could be bad for our children.
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