Money and Cash Department - Tari Moni Whai Take
Recognising the Reserve Bank’s role and responsibilities – as issuer and steward of New Zealand’s money and operator of key payments systems – we have increased our analytical, policy and governance capability to offer strategic leadership for money and cash. This included establishment of the Money and Cash Department - Tari Moni Whai Take. Te reo Māori version of our name sums up our purpose: “the department bringing money that’s fit for purpose”. Governance is being provided by a governor-level led Payments and Currencies Committee.
In the second half of 2021 we are embarking on a series of public consultations to confirm key issues facing money and cash in New Zealand and possible approaches to addressing these. We’ll be considering not only what we should be doing as steward, but what a resilient and stable cash and currency system in New Zealand might look like, and how we might best respond to digital innovations in money and payments.
The first consultation will introduce and seek feedback on the broad concepts of money and cash stewardship, and outline specific topics to be covered in the rest of the series. Subsequent papers will look at the potential for a Central Bank Digital Currency (CBDC) to work alongside cash as government-backed money, issues arising from new electronic money forms including crypto assets (such as BitCoin) and stable coins (such as proposed by a Facebook-led consortium), and how the cash system might need to change to continue to meet the needs of users.
While most of us are keen to pay electronically, we know from research, feedback, and news reports that some communities, personal and retail customers are struggling with the loss of cash and in-person banking services despite banks’ efforts to help them adapt. Other Reserve Bank-commissioned research also underlines that, despite less New Zealanders using physical cash, the ability to use it remains widely valued because it ensures inclusion, and gives everyone autonomy and choice in the way they pay and save.
Knowing that the money held in our bank accounts can be withdrawn in central bank money backed by the New Zealand government – currently only available through physical cash - is an unspoken promise which helps promote trust in banks and the financial system. We are concerned that this promise is being weakened through reducing access to physical cash services due to falling branch and ATM numbers.
However, we also know that digital forms of payment are the preferred way of paying for the majority of us, and that the future will undoubtedly involve less cash. Our job is to ensure that these transitions work for all New Zealanders.
The potential for a Central Bank Digital Currency to help address some of the downsides of reducing physical cash use and services is something we want to explore for New Zealand. A CBDC, similar to digital cash, might well be part of the solution, but we need to test our assessment of the issues and proposed approach before developing any firm proposals.
During these consultations we’ll be talking and travelling widely to hear from all the interests involved including diverse communities and customer types, along with cash, banking and fintech industries.
To be kept updated on this work please subscribe to receive Money and Cash Policy email updates.