The Reserve Bank of New Zealand (RBNZ), Te Pūtea Matua, is seeking public feedback on the prospect of a central bank digital currency (CBDC) for Aotearoa.
The declining use, acceptance and availability of hard cash along with innovations like stablecoins make this an opportune time, the bank said.
Stablecoins are cryptocurrencies that are tied to a traditional currency, in this case almost certainly the fiat New Zealand Dollar.
As the name suggests, this makes their value relatively stable, with the massive swings in value seen in other cryptocurrencies minimised. They're also less likely to be able to be impacted by famous people's public comments.
Bitcoin, the world's largest cryptocoin, went from being worth US$52,700 to $40,500 in just 16 days earlier this month.
Elon Musk, whose Tesla company bought US$1.5 billion of bitcoin earlier this year, has been accused of influencing the price of cryptocurrencies with tweets, even drawing a threat from cyber hacktivists Anonymous.
They claimed his tweets "show a clear disregard for the average working person".
"Reading the comments on your Twitter posts it seems the games you have played with the crypto markets have destroyed lives."
RBNZ assistant governor Christian Hawkesby said banks need to innovate to ensure that cash, money and ways to pay continue to be fit for purpose for Kiwis.
Two issues papers have been released for public consultation, with one focussed on digital currency and the other on stewardship of money.
"We're seeking public input on how we should assess the case for central bank money in a digital form alongside cash," said Hawkesby.
"We still have work to do to preserve cash and the cash system for those that need it. At the same time, trends in cash use and availability along with digital innovation create opportunities to innovate as well as challenges."
A CDBC would see the same features and benefits of cash but in the digital world, said Hawkeby.
"It could make for much more efficient and integrated platforms benefitting individuals and businesses, as well as protecting monetary sovereignty."
That could mean lower costs of both paying and saving for consumers as well as a greater freedom and autonomy in how to save and pay.
However, any decision to issue a CBDC would need to carefully consider risks, such as cybersecurity, and wider impacts on the business and financial sectors.
Regardless, it means our dollar notes and coins aren't going anywhere quickly.
"We want people to know that the case for keeping cash is well understood and accepted by the Reserve Bank. Cash is here to stay for as long as some of us need it," Hawkesby concluded.
The full contents of the paper can be found on the RBNZ website, alongside links to both online and offline feedback forms.
In July, Parliament's Finance and Expenditure Committee announced an inquiry into the nature, impact and risk of cryptocurrencies, looking at the nature and benefits of cryptocurrencies as well as the risks to both users and Aotearoa as a whole.
