The Reserve Bank (RBNZ) received record response to its public consultation on digital cash but the feedback was overwhelmingly negative, with more than 70% saying digital cash was "not important" to them.
Across 500 written submissions and 18,000 survey responses, members of the public expressed concerns over the privacy and security of a central bank payment method and saw little need for it in their own lives.
More than 80% of survey respondents said they did not agree with RBNZ’s reasons for investigating digital cash, which were to ensure fiat money was available digitally and that payments systems were innovative and competitive.
Just over 10% of respondents said it was important to have cash in a digital form. Adding insult to injury, only a slim majority said it was important to have any form of central bank money in the first place.
If digital cash was developed, people mostly wanted it to be free from government control, able to be used without power or internet, and not have any transaction fees.
When asked what security features would appeal, the currency being backed by the Reserve Bank ranked below offline capability, as well as cyber, fraud, and personal data protection.
The survey found the public thought a hypothetical digital cash product would be less safe than bank deposits, non-bank money, and even stablecoins or cryptocurrencies.
When asked which features of digital cash appealed the most, 65% answered “none of the above”. Other options included real time information about balances, automated payments, and instantaneous transfers.
Despite this brutal feedback, Ian Woolford, RBNZ’s director of money and cash, remained upbeat about the response and planned to continue work designing a central bank currency.
“The way I’d put it is that we are not discouraged. The big themes are things that we also care about,” he told reporters. “It is a bit disappointing that we haven't been able to articulate in a way that's really resonating for people.
“Only 16% of people said they agree with our reasons for digital cash, and trying to disentangle that is something that we'll be really working on over future public engagements”.
Woolford said he did not see the response as being overwhelmingly negative, only that people had a number of concerns and needed to see “more meat on the bones” of the idea.
“It's a bit of a tired old cliche, but it's the Henry Ford quote: if you ask people what they wanted, they wanted a faster horse,” he said. Digital cash might be something people don't necessarily recognize they want until it is made available to them.
But the RBNZ wouldn’t be “beating it into” the public, instead it would use this consultation to understand and address public concerns.
One of the key concerns was that people wanted digital cash to be private and not able to be used by the government to track or control their spending.
Woolford said it was possible to replicate physical cash in most ways. Transactions could be made instantaneously, peer-to-peer, for free, and without network connection. However, they could never be completely anonymous like physical cash.
This is because digital payments necessarily create a data record of transactions. This record can be kept private and secure but not completely erased or anonymised like physical cash.
When Bitcoin was first being introduced, many were drawn to it as an anonymous form of payment. However, it has since become clear that transactions are extremely public and easy to track due to the public nature of blockchain technology.
Perhaps ironically, central bank cash could be designed to provide users with much more privacy than Bitcoin or other blockchain payments.
Digital cash transfers could look to a user like Apple Pay, where you tap your phone or device to make a payment, except there would be no need to be online or any credit involved. The ‘cash’ could be stored locally on the device and transferred via radio signal to another.
This means transfers would still work in the aftermath of a natural disaster which knocks out the power grid, or in places without cellphone reception. The payment would also be instantaneous, like handing over a note, unlike bank transfers which can take hours.
Smartphones obviously require electricity to function, but it would be possible to store digital cash on other devices which don’t need much, or any, battery charging.
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