In this episode, Technology Partner, Tom Maasland, talks to Financial Services Partner, Jeremy Muir, about the evolving landscape of digital money in New Zealand.
[01:33 – 03:37] Jeremy begins by explaining what digital money is and the distinction between various public and private forms of money, such as fiat currencies, bank deposits, e-wallets, loyalty cards and cryptocurrencies.
[03:38 – 06:57] Tom and Jeremy then focus on Central Bank Digital Currencies (CBDCs), discussing how governments worldwide, including New Zealand, are exploring these types of public digital currency options. Jeremy further explains the distinction between wholesale CBDCs, used by financial institutions, and retail CBDCs, designed for everyday consumers.
[06:58 – 09:37] Tom and Jeremy discuss the Reserve Bank of New Zealand's (RBNZ) Digital Cash Project, which is exploring the feasibility of New Zealand's own "digital cash” retail CBDC. Jeremy outlines the project's four-stage timeline and highlights the significant public and industry feedback received during the current consultation phase.
[09:38 – 11:57] They then consider how digital cash would operate in practice, if adopted in New Zealand. Jeremy details the key design features proposed by the RBNZ, including that digital cash would be issued by the RBNZ, exchangeable one-to-one with physical cash, and distributed through third-party providers such as Banks and Fintechs. He highlights the importance of privacy in digital cash design, aiming to maintain anonymity and accessibility while balancing regulatory requirements for financial security and anti-money laundering.
[11:58 – 14:02] Tom asks how digital cash would co-exist with existing forms of digital money and physical cash, with Jeremy considering the potential interplay between these forms of currency and whether it’s time to consider retiring the traditional piggy bank.
[14:02 – 16:19] Jeremy lastly talks through some of the potential implications of a retail CBDC on bank deposits, home loans, and consumers, as well as what the future holds for digital payments in New Zealand.
Information in this episode is accurate as at the date of recording, 24 January 2025.
Please contact Jeremy Muir of our Financial Services team if you need legal advice and guidance on any of the topics discussed in the episode.
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