There are different types of money
Money can take the form of banknotes and coins, but it can also exist in a bank account, like your savings account.
Central bank money
Central bank money is government-backed and issued by us, the Reserve Bank of New Zealand. Cash is currently the only type of central bank money available to anyone.
Private money
Money that is created by private firms, such as commercial banks is called private money. All private money is 'digital' or 'electronic' - you can only get it, spend it and store it if electronic devices are involved. If you have a bank account, the balance available to buy things is an example of private money.
The first tier of the money tree splits money into digital money (electronic or intangible money) or physical money. There is 1 form of physical money — cash (banknotes and coins). Only we have the right to issue cash in New Zealand.
The second tier shows that private digital money is issued by the private sector, like a bank. Central banks, like us can also issue digital money. Currently, we do not provide digital money that is available for all New Zealanders to use. If we did, this would be called central bank digital currency (CBDC) or Digital Cash.
Paying with private money
To use private money you need a payment instrument. A debit card, a credit card, contactless technology (like PayPal or Apple Pay) and internet banking are all examples of payment instruments.
In Aotearoa New Zealand, private money is more popular than central bank money (cash).
