Positive Money has submitted a response to the Reserve Bank’s consultation Digital Cash in New Zealand. This continues its evolving CBDC (Central Bank Digital Currency) programme.
Here is a link to the Reserve Bank’s consultation page and its consultation paper (PDF 1.7MB).
And here is a link to our response (PDF).
As you’ll see in our response, Positive Money remains broadly supportive of the Reserve Bank’s work. However, there is a long way to go and opposition is building.
Some of that opposition was on display as several citizens’ groups and lobbyists put cases forward to stop the move to issue ‘digital cash’ before it gets started. The reasons ranged from “not needed – we already have digital money” to “the Government will use it to control you and your money”.
As we noted in our Introduction: Privacy issues will be central to the success or failure of retail CBDCs. We note there will be public expectations for cash-like anonymity and control and ask the bank to be clear that ʻdigital cash must not be withheld or destroyed as a punitive measure for policy reasons, such as failing to comply with vaccine mandates.’ This did not come through strongly in the consultation paper. We also restate our position that physical cash must remain to provide the “gold standard of financial anonymity” for those who require the ultimate level of privacy.
There is concern, even fear in some quarters, that Reserve Bank-issued digital money will lead to dystopian outcomes. The claimed issues often arise from speculation rather than reality, but it’s perceptions rather than technicalities that will ultimately decide if the public gets behind digital public money (as we prefer to see it called.)
To that end, here’s one of our key points for the Reserve Bank.
PMNZ questions whether the RBNZ has got ahead of itself by using the term “digital cash” as a replacement for the more general “retail CBDC” or “[digital] public money”. We understand the marketing reason but framing all CBDC uses as “cash” could cause other problems, especially related to privacy and anonymity.
The cases in the consultation paper already span a continuum from very anonymous (e.g. offline digital cash cards) to very information rich, e.g. networked, programmable applications. The RBNZ will get itself into a mess claiming “digital cash” is anonymous, then having itself and others pointing to exceptions; or by admitting that digital cash will not be anonymous and losing the privacy argument from day one.
We ask RBNZ to consider reserving the term “digital cash” to only apply to the most “privacy secure” versions of a CBDC. If it wants a more friendly, generic term for the rest, it could use “[digital] public money” which featured in its earlier work.
Read Positive Money’s full response (PDF).