The Case for a CBDC when Cash Usage Declines – Ian Woolford [Episode #19]

Podcast Intro (00:00:00) – Hello. Welcome to P.I.T. Exchange, a podcast by Currency Research. Join us as we discuss the latest in payments, innovation and technology with the industry’s most innovative thought leaders. Today’s payments are changing and moving around the world faster than ever before, and P.I.T. Exchange gives you the knowledge and insights to keep up. Sit back and relax as we join Currency Research, exchanging ideas with today’s special guest.

Jens Seidl (00:00:33) – Hello and welcome, everybody to another episode of P.I.T. Exchange. P.I.T. is payments, innovations and technology, and I’m very happy to have a guest from, well, I’m here in Frankfurt, Germany, from for me, from the other side of the world. With us, Ian Woolford, is joining us from New Zealand today. Hello Ian.

Ian Woolford (00:00:40) – Hello Jens.

Jens Seidl (00:00:41) – All right. Before I give you a chance to introduce yourself professionally and talk a little bit about, your career, we always like to start with three random personal questions to get to know that side of you a little bit better as well. First one is window or aisle on an airplane?

Ian Woolford (00:01:18) – Window.

Jens Seidl (00:01:18) – All right. Beer or cocktail?

Ian Woolford (00:01:20) – Beer.

Jens Seidl (00:01:25) – Okay. And I’ve been told you’re, you’re into music. So what was your favorite band or your favorite musician? If you can pick one.

Ian Woolford(00:01:36) – Yeah. Picking one’s hard. One of my favorites is, Joy Division and New Order. And I actually saw Peter Hook and the light playing last week. Peter Hook was the bass guitarist from Joy Division and New Order, so it’s the third time I’ve seen him. It’s fantastic. Excellent.

Jens Seidl (00:01:55) – I’m a big fan of Joy Division as well. Did you ever get to see them live?

Ian Woolford (00:01:57) – No, no, they only came to New Zealand once in the 80s and I missed them.

Jens Seidl (00:02:05) – All right. Same here, actually. Well, Thank you for that. Now let’s talk a little bit about shop. so. And do you want to introduce yourself? And I think, of course, you work for the, the Reserve Bank of New Zealand. But if you can tell us a little bit about how you got there and and what your career has been so far and, and what your current role is, please.

Ian Woolford (00:02:24) – Sure. Okay. Well, starting at the beginning, I came into the Reserve Bank as a graduate, actually, so straight from university. I started working, as an economist in the economics department. This was back in 1990. This was around about the time, we would the Reserve Bank of New Zealand was doing a lot of work on inflation targeting. So I worked there for a few years. Then I went overseas and studied in Japan and did a master’s in economics in Kobe University, actually in Japan. Came back, more time in the economics department. And then a few years later, I went off to the IMF. I was on the executive board, representing New Zealand for a couple of years. Then I came back and that was around 2001. And at that stage, central banks were starting to think quite a lot about financial stability. So I, managed a team setting up the financial stability function at the Reserve Bank. Worked on that for a few years, and then I shifted into prudential supervision.

Ian Woolford (00:03:36) – And worked for many years on bank resolution and bank capital, bank liquidity, those sorts of things. Then about four years ago, the Reserve Bank had been thinking about starting to think about the cash system. We the prompt for that is interesting, actually, we’ve got a vault, that’s aging. And we started to think about, let’s let’s look at a replacement vault. And so the first question that was asked was, well, what is the future for cash? And so there was a bit of work that said, boy, we tend to think about the cash system from a from a wholesale perspective, cash use is declining, but there are actually real, public policy issues around declining cash use, and we better start thinking about those with some urgency. And so the old currency department, which would really been just an operational department with procurement of banknotes and coins and the storage and the wholesale distribution was was changed into what we call the money and cash department. So I came in as the director of money and cash department.

Ian Woolford (00:04:57) – and one of the first things to do was to stand up a policy team and to start thinking about, the future of cash. And pretty soon after starting to think about the future of cash, I, I changed it to the future of money because I thought, there were real issues around how you think about central bank money and its role in the world. So physical cash is one dimension, but we also need to be thinking a lot more seriously than we were about central bank digital currencies. And then I thought, well actually that’s still a little bit limited. So we went from the future of cash to the future of money to the future of money and payments. Because as we started thinking about the role of money, not not just central bank money, but private innovation and money, with the advent of crypto and stablecoins and the like, we started thinking, you know, we really need to be approaching this from a more holistic perspective. So so that that’s my role. I’m the director of money and cash.

Ian Woolford (00:06:07) – It’s a hybrid department. We still do the traditional, operational side of banknote procurement and being done in coin procurement and distribution storage. But we are doing a lot of work on, central bank digital currency and what we call cash system redesign, because the New Zealand cash system is under severe pressure in terms of, losing resilience.

Jens Seidl (00:06:36) – All right. Well, let’s let’s Talk about that a little bit more. And I think you’ve you’ve actually very nicely, created a roadmap for us now for, for the next half an hour. So it’s all okay to talk about in New Zealand because the future of cash, money and payments, I think these are exactly the, the topics I’d love to talk to you about. So maybe starting with with cash and you mentioned cash, cash resilience. We’ve heard from, Australia not too long ago where I think there were some, some real serious noises about the cit, market, which is now reduced to just one player, indicating that this is becoming a loss making game, that they might have to consider their options.

Jens Seidl (00:07:19) – So what is the situation like in New Zealand, both from an infrastructure point of view, but also actually what I use is the English cash is cash usage changing and how so.

Ian Woolford (00:07:32) – Yeah, the the Australian experience is very similar to the New Zealand experience. And there are actually some commonalities in terms of the CIT players, actually. So the, the parent, the the sole remaining CIT in Australia, is, is quite publicly stating they’re, they’re, they’re losing money and, and things need to change. They’re actually the, the owner of one of the two CITs in New Zealand. But we have the same issue and we’ve been talking about this publicly, for several years now. And I say we are the Reserve Bank of New Zealand’s been talking about the challenges in the CIT sector, which is ultimately a bit of a volume, game. And as cash use, decreases, the per unit cost of cash transactions and the revenues available to CIT declines as well. So, you know, we’ve we’ve publicly, speculated about or said that in our view, there’s is overcapacity and, and the sector and some kind of consolidation or efficiencies are going to need to be found.

Ian Woolford (00:08:48) – So what’s happening at the moment actually is the the larger of the two CITs in New Zealand has applied to our commerce competition authority to take over the the smaller player and we are waiting to hear what the Commerce Commission in New Zealand will say. We, being the Reserve Bank, have publicly or have supported that. And we think there does need to be a consolidation. The, the banking industry, we’ve yet to see the written submissions, but for what we understand, will will oppose that. The reason that they give is competitive tension. And when we hear that from them, we point out, well, I think some of the competitive tension is part of the problem, with, with the system. Because what’s, what’s been happening is cash and circulation is it’s the it’s the cash paradox you see all around the world, right? You’ve got more cash in circulation, but less and less being used. And for transactions, we, we have, had quite a big drop, like a lot of other countries following on from Covid.

Ian Woolford (00:10:09) – and I think it was just last week we got the latest data from our Household Economic Survey, and that’s an internationally comparable survey where people keep journals, and notarize every single transaction they do. So it’s the most robust, measure we have of of cash use and cash use in New Zealand has fallen to 7% of transactions, paid for in cash. So we’re really at the vanguard of a cash system under pressure over the same at the same time, over the last 20 years, we’ve had the, the banks close between 30 to 45% of their branches, depending where you are in the country. And so access to cash is getting harder. Similar decline in ATMs, by by the banks. Although some small independent ATMs are stepping into the fold a little bit. But this is one of the, one of the issues that we’re really focused on is trying to get to the bottom of what’s going on here. So, you know, people will clearly, you know, have a have a preference. A lot of people, most people have a preference to operate, or to transact digitally.

Ian Woolford (00:11:32) – And we hear from the banks in New Zealand, well, that’s just people’s preference. And cash is a cost to us. And, you know, there are varying degrees of proactivity from the banks to try and exit the cash system. But the counter that we always have is, the cash system is a network. It’s a two sided market. You need willing buyers and sellers. And as you make it harder and harder for people to access cash and deposit cash and get change and do all those sorts of things, that’s really changing the, you know, the supply. So there’s, there’s both a demand and a supply phenomena going on in our view. So, that’s something we’re trying to get to the bottom of.

Jens Seidl (00:12:15) – Okay. And the UK a few years ago, they ran an access to cash study as well. And part of that was asking the question whether people actually need cash and whether they rely on cash, or whether it’s just a desire to use cash. And they found, despite also declining usage, there’s actually a large chunk of the population that absolutely require cash and depend on cash. Have you found that to be similar in New Zealand?

Ian Woolford (00:12:44) – Yeah, absolutely. about 6% of New Zealanders are wholly reliant on cash. But what we find, we do surveys, we do things called deliberative workshops, where we sit down with focus groups and work through and work through these issues, and overwhelmingly that no matter which mechanism we’re using to try and understand the public, public view, whether it’s surveys or these deliberative workshops or just general consultation. It’s pretty clear that that most people like well over half of people say, look, we want the option of using cash even if we’re not using it, as often as we used to, we want we want it to be there when we need it. And we also find through these engagement surveys that people, the New Zealanders are quite magnanimous, you know, they, they worry about the 6% who are wholly reliant on it. And our last cash survey, we do one every two years, and we ask people their attitudes to cash and, and how they’re actually transacting as opposed to, to what they’re thinking as well.

Ian Woolford (00:14:00) – And we have seen a few, glimmers the people that are using cash more often, people that are high uses of cash. So use it, say seven times a week or more, that number started to pick up. It had been around about 5%. It’s up to about 8.5% now. so I don’t, I think the, the public dialogue on cash in New Zealand is really starting to pick up. But interestingly and it’s picking up for for a couple of reasons. But the thing that’s really prompted the conversation about the cash system, isn’t conversations about our cash system redesign work or the cash system itself. It’s conversations about central bank digital currency. Because we’ve, we we went out consulting on that a couple of years ago. And we had a huge public response in terms of submissions. But most of those submissions actually said do not use digital cash or central bank digital currency to get rid of cash. And so every time we, we talk about, digital cash, which is what we call central bank digital currency, and our consultation, every time we talk about digital cash, we get the same response.

Ian Woolford (00:15:17) – We care about cash, physical cash. So we’re doing quite a lot of work on on how to generate more resilience in the system. And one of the things that we’re doing at the moment is, trialling community, cash trials. So I come to that for a second if you’re interested. So, so what, what we’ve, what we’ve done is we’ve invited towns around New Zealand who are between 1000 and 10,000, population, who have lost all or most of their banking services and we define that what that actually means, to to apply to the Reserve Bank to be part of a trial. Now, there are about 95 towns, typically rural towns in New Zealand that meet this criteria. About 80 of them have put their hand up for an expression of interest, and said they’re interested in being a part of this trial. We’ll end up selecting about ten towns, and we’re going to run a trial over about two years where we’ll be putting services services back into that town, but outside of the banking system.

Ian Woolford (00:16:37) – So what we’ll be doing is putting in place smart ATMs with cash recycling functionality, and change making functionality. So that people, you know, don’t have to travel 2 or 3 towns over to, to do their banking. General people but but actually one of the things in New Zealand is that retailers play a really important role in the cash system. So about a third of where people get their cash from is from a retailer. But based on based on our analysis, retailers end up paying for about, 68% of the entire cost of the cash system, for a variety of reasons. The cost of banking, the cost of traveling, the indirect costs queuing. So one part of the cash trial will be reimbursing retailers for cash out, with or without a transaction. Okay, so we’re trying to understand the economics of this and and the incentives and the system to see if that changes behavior.

Jens Seidl (00:17:49) – So just because I was I was going to ask because I guess from a central bank’s point of view, you have a reasonably good level of control over how cash is distributed into the market.

Jens Seidl (00:18:04) – Right? That’s that’s part of the regulatory remit. You are regulating banks. You can, impose certain rules on that side. But when it comes to the retailers, they’re not really under your remit. So how do you encourage retailers as well to want to stay a part of this and also accept cash going forward if it’s such a big cost factor for them?

Ian Woolford (00:18:25) – Yeah. So say a couple of things. Firstly, you write at the Reserve Bank of New Zealand, we do regulate the banks, but we we don’t really have any specific powers in terms of basic banking functionality, the ability to require banks to, to offer cash. At the moment, we’re seeing not just a retreat in the footprint, of bank branches and ATMs, but also within, bank branches, cash services. So it may be that you’re charged now for over-the-counter, cash withdrawals for, for example. And so that is one of the other things, as part of our work on cash system redesign, we’re thinking about, the regulatory tools that we might need and, and, and the gaps in our toolkit.

Ian Woolford (00:19:22) – When it comes to the retailers, 2 or 3 years ago we we we did a public consultation. We called it cash system redesign and we looked at the various key stakeholders. So the banks, the, you know, the CITs, the retailers and and users of cash and try to understand what kind of interventions might be needed to make sure the cash systems are there for as long as people want to use it. And we came to the conclusion that no single intervention was really going to work. We’re going to have to target all of the players and have a fairly, fairly robust set of set of tools. And in that consultation, we did raise this role of retailers and the incentives that they face and the costs that they face. Because one way to think about what’s happening is that the banks are effectively outsourcing cash distribution to the retailers, but not remunerate them for it. So in our consultation, we raised the prospect of that outsourced service being remunerated. That’s one of the points of our community care service trials, and that is to understand the economics of retailers giving out, giving out cash.

Ian Woolford (00:20:39) – As part of that trial, as I think I mentioned, we will partner up with retailers in these ten towns that we select and we will we will pay them for every cash out that they give. Now we’re just working through the finer details of that at the moment. But one of the reasons why we’re doing that is to understand what’s a fair and reasonable reimbursement for that service, and in our consultation in 2021, we raised the idea that banks should actually be paying for that as an outsourced service. And that is something that currently we, we do have the power to, to impose on banks. So, so there’s there’s a lot more water to go under the bridge on that. But, yeah, it it gets you into some quite interesting philosophical discussions, not just the nature of the critical infrastructure of the case system and other payment systems but also, what does it even mean to be a bank if you’re no longer, accepting or offering offering cash? There’s some some quite sort of interesting things to work through there.

Jens Seidl (00:21:53) – This is so interesting. We already spend more time on this, and I thought we would do and I could keep going. But I also wanted to talk with you, of course, about the, digital money and the future of money. And as you I think you mentioned before, you did a consultation on CBDCs. Can you share us a little bit, of, of that experience with us and let us know what the public interest in that is? And, where likely use cases could be for a retail CBDC and where this could go potentially.

Ian Woolford (00:22:28) – Sure. So we’ve done two public consultations on on central bank digital currency. The first one was 2 or 3 years ago, and it was really just a more like an issues consultation where we said, hey, there’s this thing called a central bank digital currency. We’re thinking about what do you think? And that was the consultation where, you know, typically for a Reserve Bank of New Zealand consultation, say, and, and the prudential area We might get 10, 20, 30 submissions.

Ian Woolford (00:23:01) – We got, over 6000 submissions on the CBDC one. So by our standards, that was a lot. And as I said, most of those were people saying, we’re worried about the cash system. We are currently consulting on our second CBDC consultation. We call it, as I said, digital, digital cash. That consultation is still open. We’ll take submissions from anyone, so anywhere around the world that wants to submit on it as well. There’s a there’s there’s a survey. You can find it on our website. but what this consultation is doing is, putting a bit more meat on the bones in a way. What what we’re saying is we think digital cash is going to be necessary. We think it’s it makes sense. let’s describe the kind of functionality and how it might be used, so that people can, engage with that and think about, think about what it means for them, either as individuals or as financial institutions. Now, the the sorts of things that we are proposing, firstly, it will be a we don’t we don’t actually call it a retail CBDC.

Ian Woolford (00:24:20) – I know that’s what people typically talk about overseas retail or wholesale. We talk about it as a generally available CBDC. So, you know, it’s close to retail, but wholesale institutions could could use it as well. But our focus at the moment is really on the retail use case. It will be a two tier model where, would be distributed by the banks, but not necessarily by the banks. And that’s a really important point, because what what we’re really focused on is, is cash use is declining and digital, new forms of, of the new digital forms of, ways of transacting is growing, with the advent of stablecoins, etc.. We’re worried about, preserving monetary sovereignty. We’re worried about continuing people, having the option of using central bank money, whether it’s digital or physical. But we are also worried in New Zealand about the lack of innovation and efficiency in the payment system. So we see, digital cash as being something that can be quite disruptive, in a positive way. I think, you know, there’s a lot of concern.

Ian Woolford (00:25:50) – You see a lot of papers around the the role that a CBDC could have on disintermediation. There obviously is a central bank with a financial stability mandate. We we care about financial stability. But I think we’ve also been very clear it’s not the role of the central bank to protect the the profit streams of the incumbents that what we’re interested in as good payments outcomes for, for New Zealanders, on an efficient, basis, there’s a lack of competition. And this in our system, open banking has been moving at a glacial pace. There are fund. You have a the New Zealand financial system is very bank dominant. Four big banks have in about 95% of financial system, assets. They they have legacy systems. They find it hard to, to innovate and, and you know, in New Zealand at the moment, for example, I think we’re the only OECD country that doesn’t have a faster payment system. So you could say we’re years behind other countries. So we see CBDCs, digital cash as a way of facilitating competition and growth and innovation, not so much because the CBDC, itself will provide the innovation from from the Reserve Bank, but it will facilitate it through fintechs and others who can then, you know, provide new product offerings or existing product offerings on, on a cheaper basis.

Jens Seidl (00:27:35) – Yeah. So maybe to retrace from from my perspective, I guess what you’re saying is currently the market entry hurdles for fintechs are pretty high because of that lack of of innovation, lack of fast payment systems, etc. but AC, DC could actually lower that barrier significantly. Is that right?

Ian Woolford (00:27:55) – Yeah, we think so, because part of the idea is that the, the CBDC wallet, could be made available from your bank or it could be made available from another, entity. One of the things that we hear quite a lot about, from the fintech sector in New Zealanders, even even things like access to bank accounts can be quite difficult. There’s it’s and it’s a bit hard to, to understand, the, the ground truth in a way, but there is there is this deep concern around money laundering. You know, quite, quite rightly, it’s it’s something to be concerned about. But the banks take a very risk averse, approach to any, form of, entity that’s sort of a crypto based entity.

Ian Woolford (00:28:56) – Now the crypto community hasn’t always covered itself in glory. So on some levels you can understand that. But the other the other thing that that we’ve been doing in is consulting on, private innovation and money. And I guess where we get to there is thinking about the, the crypto, the fintech sector, and the role potential role for stablecoins. Where we come to is that in due course, they’re going to need to be regulated because they’re going to be, a sector that people are going to have to have trust and confidence in because if you’re looking for innovation and more efficient ways of doing things and competition, we think that’s the sector where that’s going to need to come from. And there’s an obvious role for central bank digital currency backed into, you know, providing the collateral for for a stablecoin and a well-regulated sort of system. I mean, ultimately, you know, we’re really focused on trust and confidence in the New Zealand dollar, first and foremost. but we’re also interested in trust and confidence in the financial system as, as well.

Ian Woolford (00:30:08) – And so again, I think that’s where we see a role for CBDCs.

Jens Seidl (00:30:15) – Okay, sure. Maybe coming back to the the public consultation. Have those that participated other than saying don’t replace our physical cash. Have they also expressed some views on what properties they would want to see with, with digital cash? so when I look at the consultation in Europe, for instance, in the EU, privacy was a really big topic. But there’s other things like offside, sorry, offline, functionality, etc. etc.. Have you already got a good overview?

Ian Woolford (00:30:47) – Yeah. So the consultation is still open but to your point, the, the description of digital digital cash product that we’re talking about, it does have peer to peer functionality. It can operate outside the banking system. It should be able to operate, offline, so tick tick tick. The other thing is we’ve done a lot of fair amount of work and thinking about the privacy dimension. One of the things that we’ve said is we want a, CBDC to replicate the properties of cash as much as possible.

Ian Woolford (00:31:27) – Now, cash is anonymous and that, you know, there’s no record. You hand $20 to someone and and there’s no there’s no real record of that. There will be a footprint, obviously, in any digital transaction. But the point that we have made as part of our consultation as the Reserve Bank of New Zealand wouldn’t see any of the transactions and wouldn’t even necessarily know who who held the wallets. As part of our consultation, we released another half dozen papers, and one was entirely on the importance of privacy and how we think about privacy with respect to a CBDC. So, it’s a real it’s a real challenge because the first one thing that we always hear, of course, is we don’t want the government tracking, tracking our money. And so we are trying to give people as much comfort as we can to say, look, we hey, we won’t see it. We actually deeply care about privacy and, people’s digital rights. And that is something that we will build into, into, the CBDC and the sense that although it will be through a third party provider, and even if it is a bank, I mean, banks collect your data and use your data all the time.

Ian Woolford (00:32:48) – That’s something that people don’t seem to worry about. They worry about the government using it. And and I understand that, but our starting point is will have stricter, requirements around data usage, for third party providers than they would have for themselves. So privacy is hugely important in our view.

Jens Seidl (00:33:11) – Okay. And when it comes to adoption rates, I think we’ve seen in, in a lot of, the existing live implementations of retail CBDCs, that adoption rates aren’t really that high. But I guess what I’m hearing from you is within the expectation that the CBDC will be used as rails, if you like, for new user experiences. I guess that’s the main reason then that should drive user acceptance.

Ian Woolford (00:33:37) – Yeah, I think I think that’s a reasonable, assumption. The one one thing and it’s, it’s on some levels it’s easy to say, but one prior that we have I suppose is I know there’s a lot of concern about uptake for CBDCs. So you have this you have this kind of dilemma that central banks talk about.

Ian Woolford (00:34:03) – On the one hand, you know, it’s like you have a party and no one comes. We have a party and everyone comes and you have to close the party down. So you know no one uses your CBDC or it actually has more uptake and you worry about disintermediation. Now, I think the latter is completely overblown because there are so many levers and tools and constraints and terms and conditions and things that you can you can put on to it. But but for me, I think the main issue here is what’s the outcome that you want. So if if you never use a CBDC as a New Zealander, that that doesn’t matter. The point is that you’ve got choice, to use it or to not use it, and hopefully you trust it, but if it if it does indeed lead to more competition and innovation, then you’ll benefit from that anyway. And so as a public policy institution, the outcomes, if they’re generated by the private sector, that’s great. They’re not. The New Zealand banking system is the most profitable in the world.

Ian Woolford (00:35:11) – We don’t have faster payments. The open banking is just not working or it’s working at a glacial pace. So, so if a if digital cash or a CBDC has does actually act as a spur to innovation, and we think it will, then then that will have an impact and that is delivering on a public policy objective.

Jens Seidl (00:35:38) – Yes, okay. No, I hear that. That makes perfect sense, but I still want to look back to what we said at the beginning when we said cash and then money of the future and payments of the future and and just to challenge whether CBDCs are necessarily the right answer. I think we’ve seen great adoption rates with faster payments based systems like Pix in Brazil, for instance, also in in India and China, mobile payments that use faster payments as underlying rails. Would that not maybe be the better bet now to push faster payment systems instead of CBDCs?

Ian Woolford (00:36:18) – Yeah, I mean it’s it’s a it’s a fair challenge. I think I’d say a few things. One is, as I’ve said in in New Zealand, we don’t have a faster payment system. The industry is starting to talk about it. And, they as some of those conversations actually starting to pivot more into concern around, scams and fraud. And so some of the narrative now is not to go faster, but to go slower to add and more checks and balances, but I’d also say speed is only one dimension. You know what what we’re interested in, as I keep saying, is the competition and the innovation. But there are other things as well. There’s inclusion, there are people outside of the banking system, and they should also have the ability to access and use both cash and digital forms of central bank money. The the other the other point I would make, based on our experience in New Zealand with the New Zealand banking system, things move very slowly. We’ve got banks with 1960s legacy sort of systems. It is not a straightforward, task to build a new, faster payment system. And so that could take quite a long time. The, the kind of time frame we’re talking about for central bank digital currency, assuming that the government, you know, agrees.

Ian Woolford (00:37:50) – Yes. Because there will need to be legislative change. We’re talking about a sort of 2030 target. I find it impossible to believe, based on 20 years of experience with the, the payment system in New Zealand, that, you’d be looking at a faster payment system, before then. So in any case, there would be advantages to having both CBDC and faster payment systems, coexisting.

Jens Seidl (00:38:20) – Great. Okay. Thank you. I wish we could keep going, but I think we’re about to run out of time. This was super interesting. I’m definitely going to watch the, I’m not sure whether I’m going to participate, but I’m definitely going to watch the consultation that’s that’s currently underway. When when is it closing?

Ian Woolford (00:38:40) – 26th of July I think.

Jens Seidl (00:38:42) – All right. Excellent. So I’ll keep an eye out for that. And maybe, we can get together at some point as well when the results have been analyzed and the roadmap becomes clearer and talk about the next stages in this development. I’d love to.

Ian Woolford (00:38:56) – Yeah, sure. I’d like you to.

Jens Seidl (00:38:58) – Great. And thank you very much for being with us today. Really appreciate that. Thank you very much. And yeah, hopefully. See you soon.

Podcast Outro (00:39:06) – Thank you for listening to The P.I,T, Exchange, a podcast by Currency Research. Check out our upcoming events and publications at, and join us for our next episode to hear what’s trending in payments, innovation and technology.

In a recent episode of our podcast, we had the pleasure of welcoming Ian Woolford, the Director of the Money and Cash Department at the Reserve Bank of New Zealand. Ian shared his extensive experience and insights into the evolving landscape of cash usage, the challenges faced by the cash system, and the potential role of Central Bank Digital Currency (CBDC) in addressing these issues.

The Decline of Cash Usage in New Zealand – 

Changing Landscape of Cash Transactions

Ian highlighted a significant decline in cash transactions in New Zealand, driven by the increasing adoption of digital payment methods. This shift has led to the closure of numerous bank branches and ATMs, reducing public access to cash.

The Role of Central Bank Digital Currency (CBDC) – 

Preserving Monetary Sovereignty

Ian emphasized the importance of preserving monetary sovereignty in the face of declining cash usage. A CBDC could play a crucial role in maintaining the central bank’s control over the monetary system and ensuring the stability of the financial sector.

Addressing Innovation and Efficiency

The current payment system in New Zealand lacks innovation and efficiency. A CBDC could facilitate competition, growth, and innovation, particularly for fintech companies.

Trust, Privacy, and Anonymity in Digital Transactions – 

Building Trust and Confidence

Ian stressed the importance of trust and confidence in the financial system. For a CBDC to be successful, it must be designed to ensure security, privacy, and anonymity in digital transactions.

Addressing Adoption Rates

One of the challenges of implementing a CBDC is ensuring high adoption rates. Ian acknowledged that the banking system in New Zealand is slow to adopt new technologies, which could impact the success of a CBDC.

Coexistence of CBDC and Faster Payment Systems – 

Catering to Different User Needs

Ian discussed the coexistence of CBDC and faster payment systems, highlighting the need for both options to cater to different user needs and preferences. While some users may prefer the convenience of digital payments, others may still rely on cash for various reasons.

Public Consultation and Roadmap for CBDC Development – 

Engaging with the Public

The Reserve Bank of New Zealand is conducting ongoing public consultations on CBDC to gather feedback and insights from various stakeholders. Ian emphasized the importance of public participation in shaping the future of digital currency in New Zealand.

Potential Roadmap

The discussion concluded with a potential roadmap for CBDC development, outlining the steps and considerations involved in implementing a digital currency.

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Disclaimer: While we embrace open dialogue and value diverse perspectives, it’s important to note that the views expressed by individuals in our podcast episodes are entirely their own. They may not necessarily align with the views, opinions, or positions of the organization they are associated with.