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Public views on the future of money

This page contains information on Public views on the future of money from the May 2022 Financial Stability Report.

This page contains information on Public views on the future of money from the May 2022 Financial Stability Report.

Insights from feedback to the Future of Money issues papers

In September 2021, the Reserve Bank released the Future of Money Stewardship – (Te Moni Anamata – Kaitiakitanga) issues paper. This paper expanded from previous consultations on the future of cash by broadening discussions on the future of New Zealand’s money. The issues paper set out the importance of central bank money as a value anchor for the financial system (thereby supporting stability) and for achieving financial and social inclusion. The issues paper also proposed the Reserve Bank should take a broader and more holistic stewardship role over New Zealand’s money.

In an effort to progress work on policy options for securing the roles of central bank money identified in the Stewardship issues paper, the Reserve Bank released two further issues papers: Future of Money – Central Bank Digital Currency (CBDC) (Te Moni Anamata – Aparangi ā Te Pūtea Matua) to explore ideas for a digital form of central bank money; and Future of Money – Cash System Redesign (Te Moni Anamata – He Whakahou i te Pūnaha Moni), which considers options for redesigning the cash system to ensure it is fit for purpose.

Public feedback on the three issues papers was broad and informative for our work plan. While a detailed summary of the submissions will be published separately, three insights emerged and are outlined below.

The public are highly engaged in the future of money issues

The level and content of the responses to the three issues papers revealed that New Zealanders care deeply about the future of their money, particularly cash. We received over 6000 responses from the public and stakeholders. Most of the responses were received in response to the CBDC issues paper, but the nature of the feedback spanned the content of all three. Over 90 percent of the responses from the public were received via online survey in a short period following interest on social media. In addition, detailed submissions from stakeholders and members of the public provided substantive feedback.

Cash remains very important to New Zealand

The nature of the responses confirmed that many New Zealanders support our work on ensuring the future of cash despite its long-term decline. Some respondents considered access to cash as a basic human right, stating they value the privacy it provides and its tangibility, as well as being an alternative for those with a low level of trust in banks or the government.

Many respondents pointed out that cash facilitates the social and cultural life of New Zealanders. These themes confirmed findings from the 2019 Future of Cash consultation and 2021 deliberative workshops.

The privacy and autonomy afforded by cash was a repeated theme in responses to the CBDC issues paper. This reinforced the proposal for a CBDC to be ‘cash-like’ in the sense that people are able to freely and privately use and hold cash, and that it can be used as a back-up payment in personal emergencies. Therefore, future work will, in the first instance, focus on a privacy-centric CBDC that also helps us achieve inclusion goals.

The majority of responses supported having a well-functioning cash system and flagged the urgency with which actions should be taken to redesign the cash system. Members of the public, community representative organisations, merchants and cash industry participants supported prescribing minimum standards for commercial bank-provided services and equipping the Reserve Bank with new tools to direct banks to provide cash services at low cost. Respondents also expressed support for mandating the acceptance of cash by merchants and government entities, but concerns about unintended consequences were raised by banks and merchants.

We must continue a multi-stage approach

The feedback to the papers also reinforced our need to take a multi-stage approach in addressing the Future of Money issues. More detail and further consultation was requested on the concept and responsibilities of stewardship, on the design and arrangement of a CBDC, and on cash system options.

On stewardship, most respondents supported the proposed objectives, role, responsibilities and approach. However, many requested further clarity around the Reserve Bank’s vision for the future of money and payments and on how stewardship will operate in practice. We plan to develop a framework for measuring and monitoring the needs of the public for cash, reporting on how we are tracking against the stewardship objectives and outcomes, and establishing expectations of how we act as Steward with stakeholders and partners.

Among the respondents who understood that the Reserve Bank was not contemplating replacing cash with a CBDC, enthusiasm was evident. There was general agreement on most of the opportunities, challenges and risks outlined in the paper. However, details on its design and distribution arrangements were requested. Opposition to a CBDC arose due to the lack of perceived need for a CBDC, or the potential risks created by its introduction such as breaching transactional privacy or cyber-attacks. We plan to test whether and how the various design principles for a CBDC, including privacy, can be ensured and engage in further consultation with industry and the public to advise our work.

Although banks supported the proposed criteria to assess the cash system, they suggested that a clearer problem definition, and a joint money and payments strategic vision, are essential.