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RBNZ signals interest in central bank digital currency, seeks feedback

·1-min read

WELLINGTON, Sept 30 (Reuters) - New Zealand's central bank said on Thursday that it was seeking input from the public on the potential use of a central bank digital currency (CBDC).

Many countries are exploring the use of CBDCs, which are digital forms of existing currencies. The U.S. Federal Reserve will soon release research examining the costs and benefits of a CBDC, Fed Chair Jerome Powell said last week.

"A Central Bank Digital Currency would see the features and benefits of cash enjoyed in the digital world, working alongside cash and private money held in commercial bank accounts," RBNZ Assistant Governor Christian Hawkesby said in a statement.

"It could make for much more efficient and integrated platforms benefiting individuals and businesses, as well as protecting monetary sovereignty. However, any decision to issue a CBDC would need to carefully consider operational risks, such as cyber security, and impacts on the financial sector," he said.

Cryptocurrency investors and other digital finance enthusiasts are keenly following whether the Fed will issue a digital dollar, as well as interest by other central banks.

While the exact structure has not been decided, a digital currency issued by a central bank would be different from cryptocurrencies such as bitcoin, which are decentralized and can fluctuate wildly in value.

In a paper released along with the statement, RBNZ noted the declining use and acceptance of cash in New Zealand and innovations in private money like stablecoins.

Central banks in Australia, Singapore, Malaysia and South Africa are conducting a cross border payments trial using different CBDCs to assess if this allows transactions to be settled more cheaply and easily. (Reporting by Praveen Menon; editing by Richard Pullin)

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