Responses to the Reserve Bank of New Zealand’s public consultation on digital currency are negative due to concerns about privacy and government control.
Widespread skepticism was revealed in the Reserve Bank of New Zealand’s (RBNZ) December 10 results from a recent public consultation on a possible central bank digital currency (CBDC).
Findings Show Little Interest in Digital Currency
The consultation, which took place from April to July 2024, aimed to gather views on whether a CBDC was essential for the economy of New Zealand. It collected input from 18,000 survey responses and 500 written contributions.
The consultation results showed that just sixteen percent of participants agreed with the RBNZ’s choice to create a CBDC to guarantee digital access to central bank funds and promote economic innovation in New Zealand.
The respondents’ top worries turned out to be privacy and security. Significantly, 90% of respondents voiced concerns about government overreach, with financial surveillance being a significant concern.
“Even if not intended for intrusive purposes now, a CBDC could evolve into a tool for monitoring financial behavior,” one participant said, highlighting the possibility of data exploitation as one of the concerns raised by several respondents.
Sixty-five percent of respondents said they don’t think features like automated payments and real-time balance updates are necessary.
Privacy, Self-Government, and Cryptocurrency’s Function
The respondents also emphasized the benefits of cryptocurrencies like Bitcoin and Ethereum, which they believe provide greater privacy and decentralization.
Although some attendees thought stablecoins were a good substitute, Adrian Orr, the governor of the Reserve Bank of New Zealand, disagreed, calling stablecoins “inherently unstable and not a viable replacement for traditional currency.”
The RBNZ has declared that privacy and autonomy will be its primary priorities in response to widespread concerns. To solve these problems, the central bank intends to investigate technological and legal options. The RBNZ stated that “these issues will form the backbone of our end-user strategy.”
“The central bank will not control or see how you spend your money,” director Ian Woolford promised the public in 2024. He explained that digital currency would facilitate offline payments through digital wallets, cards, or smartphone apps and coexist with conventional currency.
Global Discussion on CBDC
The consultation results come as central banks worldwide discuss how CBDCs fit within their own economies. In contrast to New Zealand, nations such as China have advanced their digital currency trial programs.
However, the user base of well-known payment networks like Alipay and WeChat Pay has posed significant obstacles to broader adoption in China, making it challenging for customers to switch to the state-backed currency.
The global drop in central banks’ enthusiasm for CBDCs further contextualizes New Zealand’s mistrust. Only 13% of central bankers endorsed CBDCs as a solution in 2024, according to a poll conducted by the Official Monetary and Financial Institutions Forum (OMFIF). This is a sharp decline from 31% in 2023.
Many people instead favor interconnected instant payment systems, such as the US FedNow, which reflects a global reluctance to accept digital currencies.
