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The Future of Money — Private Innovation

Te Moni Anamata — Te Auahatanga

We want feedback on our proposed approach to the opportunities and challenges from new forms of private money such as cryptoassets, including stablecoins.


Summary of submissions and next steps

This consultation closed on 3 April 2023.

We received 50 submissions from a cross-section of stakeholders.

You can read our full response to the submissions and next steps in the summary of submissions document.

Summary of submissions (PDF, 923KB)

Read our news release about the summary of submissions

  • Risks and opportunities cut across sectors and need a whole-of-public-sector response. 
  • There is support for enhancing competition in banking and financial services.
  • The risks are recognised, particularly regarding monetary sovereignty and centralised/intermediated services.
  • Regulators need to be cautious in fast-moving areas.
  • There is general support for a balanced, principle-based approach.
  • Aligning with regulators in similar jurisdictions is crucial.
  • There is strong support for our proposal to monitor the sector closely.
  • There is agreement that an initial focus on stablecoins is right.

We thank the submitters for their thoughtful contributions to our consideration, refinement and response to the issues raised by private innovation in money.

The submissions reinforced our view that there are significant risks and opportunities, but also significant uncertainties about how the sector will develop and where the optimal balance will lie. We agree with the view that caution is needed. This is why we are not proposing a regulatory response at this point.

Another reason for taking a cautious approach lies in regulatory developments globally. There is likely to be real advantages to harmonising cryptoasset regulation. As various overseas regimes are implemented, best practice for regulating cryptoassets may become clearer. This will inform our optimal regulatory design and the assessment of any need for alignment.

We also note that implementation of other regulatory regimes, such as the Financial Market Infrastructure Act may also have a secondary impact on the cryptoassets market. We agree that regulatory measures also need to be comprehensively monitored for their flow-on impact.

Issued raised by cryptoassets and other innovations do not fall neatly within the existing agency boundaries. Issues such as consumer and investor protection, or perceived regulatory barriers to entry, can have an impact on the collective vision we have for a reliable and efficient money and payment system that better meet New Zealanders’ evolving needs. These issues matter also because how we respond now could shape how they evolve from their current use, for example, to become new forms of money.

We will continue to work with other agencies, particularly through CoFR, to support healthy growth in the financial ecosystem, as well as continuing to engage with industry and other stakeholders on issues as they arise.

More immediately, we intend to strengthen our monitoring capability in a more systemic, robust, way. Currently our data is limited and varies in quality, which limits our ability to assess potential issues and then respond in a timely and effective manner.

Monitoring global regulatory developments, particularly in similar jurisdictions and with key global organisations such as the Bank for International Settlements, will be an integral part of the monitoring framework. We need to take a cross-agency approach to monitoring as well as future regulation. RBNZ is already working with other CoFR agencies to identify gaps in data and metrics. Building on this work we propose a staged process to enhance our capability.

Summary of submissions 001 to 011, PDF 15.66MB

Summary of submissions 012 to 026, PDF 12MB

Summary of submissions 027 to 039, PDF 2.3MB

Summary of submissions 040 to 050, PDF 3.09MB

Name Volume Page number
001 Mullaney 1 1
002 H Cropp 1 2
003 M Loga 1 9
004 D Clapham 1 10
005 Techemynt Dodds 1 11
006 A Craig 1 14
007 Tauranga DAO 1 18
008 AR Baker 1 19
009 Elas Digital Rosco 1 22
010 P Dath 1 37
011 PIN 1 42
012 A McPherson 2 1
013 P Pomana 2 5
014 C Ellingham 2 38
015 CashWelcome 2 44
016 H Billia 2 49
017 K Hurren 2 50
018 S Newman 2 62
019 Redacted 2 74
020 Adam 2 76
021 M Luke 2 77
022 S Baker 2 81
023 Sasquatch 2 82
024 R Grimm 2 102
025 EasyCrypto 2 106
026 Westpac 2 114
027 C McNulty 3 1
028 S Corbet 3 48
029 PNZ 3 50
030 HGW 3 67
031 Positive Money 3 93
032 Ripple 3 94
033 T Watt 3 104
034 C Waldron 3 107
035 R Pratt 3 112
036 G Atkin 3 114
037 NZFMA 3 116
039 L Ngata 3 118
040 BNZ 4 1
041 ANZ 4 16
042 R Clarkson 4 28
043 BlockchainNZ 4 30
044 M Taylor 4 38
045 A Sims 4 41
046 GrantThornton 4 47
047 Anderson 4 56
048 AWS 4 60
049 Vollemaere 4 63
050 W Remor 4 74

What this issues paper is about

Money and Cash Policy Manager Robbie Taylor and Senior Policy Analyst JC Somers step through the structure and main points made in the issues paper consulting on a proposed approach to the opportunities and challenges from new forms of private money such as cryptoassets, including stablecoins.


Sections 1 to 3
  • Introduction
  • Stewardship of money
  • What our stewardship interest captures

Sections 1 to 3 of this paper introduces our stewardship role regarding private money, including the objectives, approach, focuses and scope. 

Section 4
  • Opportunities for greater competition and further innovation

Section 4 covers the fundamental opportunities we see in a level playing-field for money and payments, for both existing and new forms of money.

Section 5
  • Risks with private innovation in money

Section 5 describes the risks we think would need to be managed if new forms of private money become more widely used.

Section 6
  • Our proposed response

Section 6 outlines our proposed response given the current state.


The appendices include background material.

This Issues Paper explores Private Innovation in Money with a focus on opportunities and risks this may offer New Zealand, and our ability to meet our objectives as the steward of money.

By private innovation in money, we mean novel arrangements that claim to provide new forms of money or associated services, using new technologies, financial models or organisational forms. Cryptoassets, including stablecoins, are key examples of these arrangements, but they are not the only ones. The use of the Distributed Ledger Technology (DLT) to tokenise bank deposits, for instance, would be another example. Therefore, we intend to take a technology-neutral approach to innovations.

In this Issues Paper, we are seeking feedback on our assessment of:

  • the opportunities and risks posed by private innovation in money
  • how these innovations might impact our objectives as the steward of money
  • what regulatory responses could be required to help deliver those objectives in the context of private innovation in money.

Private innovation in money involves complex issues ranging from financial stability, to consumer protection, to anti-money laundering and other contentious policy areas.

We are working with other members of the Council of Financial Regulators (CoFR) to address cross-cutting risks and shared challenges — for example — regulating Decentralised Autonomous Organisations.

Read the statement of CoFR's position on cryptoassets | Council of Financial Regulators

This Issues Paper is written from the perspective of the Reserve Bank as a steward of money. This perspective means we are primarily interested in the application of innovation to money, or things that are used like money. This stewardship role is derived from section 9(1)(c) of the Reserve Bank of New Zealand Act 2021, and our central banking objective. One of our statutory functions in this area is to monitor technological developments in money under section 116(c)(iv).

Our high-level stewardship objective is that New Zealand has reliable and efficient money and payments systems that support innovation and inclusion.

While central bank money is at the heart of what we do, we also have a strong interest in how the money and payments system works with new and existing forms of private money. At the heart of this system is a longstanding relationship between central bank and private bank money that we often take for granted.

The emergence of cryptoassets using new technology is now challenging the way people think about this relationship. This is happening alongside a range of broader developments in the money and payments system, including:

  • concerns about existing inefficiencies in private money — for example — in cross-border payments, and calls by some for wholesale disruptions in money
  • the perceived need for and benefits offered by new forms of money in an ever more digitalised economy — for example —  web3 and the metaverse
  • the claim of cryptoassets to be money and the potential for them to be used this way, which purports to address those new or existing demands above
  • the declining use of cash, the only public alternative to new and existing forms of private money, and the potential impact on central bank money as the value anchor
  • the growth of cryptoassets without regulatory safeguards, or a value anchor in central bank money.

These developments draw into question our response and what tools we need for that response. We approach this question with some priors (or assumptions).

  • Competition: competition is a foundation for trust and efficiency in private money.
  • Choice: competition enables greater choices, but people’s ability to effectively exercise choice matters too. 
  • Trust: the current level of trust in private money across the board should be preserved. 
  • Same risk, same regulation: there should be a level playing-field between different forms of private money. 

Currently, our core tool to influence the provision of private money is our ability to issue central bank money and its relevance as a value anchor, a vehicle of monetary policy, and a lender of last resort. This is not just about producing banknotes and coins and is distinct from the Reserve Bank’s longstanding prudential regulatory functions. In the future we may also have a central bank digital currency, which would be another form of central bank money. The stewardship role and monitoring function under the Reserve Bank of New Zealand Act 2021 mentioned above will enable the Reserve Bank to respond more effectively to changes. 

Still, more may be needed to encourage competition, choice and trust in money products available to New Zealanders. We also need to take a proactive approach to address risks that, once they emerge, could be difficult to reverse. Such an approach should be technology-neutral and technical matters themselves (for example, the relative merits of different types of cryptographic methods) are outside our scope. However, we should not be blind to the implications of technology.

As the steward of money, cryptoassets used simply for speculative investment are outside our scope. However, we are conscious that assets used as money on a smaller scale may also pose risks to consumers and may lead to further uptake. In the latter circumstance, market discipline and a ‘buyer beware’ approach is insufficient to deliver efficiency and other stewardship outcomes.

Other risks posed by private innovation in money, such as to financial stability, are within the scope of existing legislative regimes, in particular, the Financial Markets Infrastructure Act 2021. 

Our current assessment is that the uptake of cryptoassets for use as money is limited. However, cryptoassets appear to be embedded as an asset class, and wider use may occur over time. It is therefore timely to reflect on the opportunities and risks related to new forms of money more generally.

In terms of opportunities, we consider that beneficial innovation in private money using new technology may help broaden access to the money and payment system from outside the banking sector. Broadening access supports competition, which is key to delivering efficiency and supporting further innovation. 

At the same time, we see a range of general risks that new forms of money could pose to users, even if they are not widely used. These include fraud and theft, Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT), and technology and cyber risks. Some forms of cryptoassets, particularly stablecoins, also pose a range of further risks related to the stability of the asset's value, the ability and costs of redeeming the stablecoin for fiat currency, and the solvency of the issuer of the stablecoin. It is important that these risks are adequately managed, including through regulatory measures where needed. 

In addition, several risks also need to be managed if new forms of money become significant. These risks are often associated with externalities resulting from strong network effects which constrain market efficiency and impact consumers.

The first possible risk is the potential for new forms of money to be bundled with other products or services offered by dominant players in other markets, such as technology or commercial platforms. Some of these platforms operate dominant networks, allowing money issued by them to scale quickly, recreating barriers to entry, and extracting excessive rents. 

Secondly, new forms of money should not fragment trust in private money or efficiency benefits to the wider economy that are currently achieved through 1:1 convertibility and prudential regulation. Therefore, our regulatory framework needs to remain robust. Any changes to promote competition and further innovation should deliver the same level of trust and efficiency.

Thirdly, significant uptake of new forms of money not denominated in New Zealand Dollars (NZD) could potentially undermine our monetary sovereignty or, at the very least, complicate the implementation and transmission of monetary policy. It may be desirable to have safeguards against this so that beneficial innovation in money can occur without constant vigilance over monetary sovereignty concerns.

In response to emerging opportunities and risks, we are developing a monitoring framework to understand how the market for new forms of money is developing and the implications for the monetary system, so we can act if necessary. This framework will use a wider range of metrics to assess the significance of new forms of money to New Zealanders, such as the extent of use for day-to-day payments or concentrated use within some communities.

Provided that the risks can be managed, we consider that regulators should be open to alternative business models for the issuance of money. Internationally, the stances of regulators range from proposing to heavy regulation of innovation in money to openness to new forms of money with a lighter regulatory touch. Overseas experience will provide useful starting points to explore what alternative regulatory models may be required and what they might look like.

Further work could explore how providing regulatory certainty might enable beneficial innovation to emerge. This would allow society to benefit from the innovation provided by new forms of money and the technology that underpins it, while addressing the risks described above.

What we are asking for feedback on

Section 2
  • Do you agree with the core drivers, assumptions and high-level approaches that we have described in relation to our work on private innovation in money? 
  • Is there anything else we should consider?
Section 3
  • What do you see as the biggest issues with private innovation in money? 
  • Do you agree with how we frame the focus on stablecoins? Are there other forms of innovations we should be looking at?
Section 4
  • Do you agree that there is a significant opportunity to enhance competition and further innovation in a New Zealand context?
Section 5
  • Do you agree with the key risks to the stewardship of money identified here? 
  • Are there any other risks that we should consider? How significant are they? 
Section 6
  • Do you agree with our proposed monitoring approach? Is there anything else we should monitor? 
  • Do you agree that we should be open to alternative models of money? Can they work in a New Zealand context?
  • What issues do you think we should prioritise in developing further regulatory response? For example, should we prioritise issues about the rights of stablecoin holders, or the use of Digital Autonomous Organisations (DAOs), or something else?