Ian Woolford: Reserve Bank Director of Money and Cash on Kiwis staying keen on physical money

Most New Zealanders are still keen on using physical cash, a new Reserve Bank consultation has found. 

Their online survey drew in over 18,000 respondents, with many worried digital money would replace banknotes and coins.

The central bank's Director of Money and Cash, Ian Woolford, says people are worried about privacy and control when it comes to money.

"It's a personal choice - money is quite a personal thing and it's quite natural for people to have concerns about people monitoring their use."

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Episode Transcript

Speaker 1 (00:00):
The Reserve Bank says most of us are still keen
on using physical cash. It recently asked for feedback on
making cash available in a digital form, and the bank
says it drew the highest number of responses it has
ever received on anything it is asked for. Eighty four
percent of us we're worried about losing access to physical cash,

(00:20):
with big concerns around the privacy of how we spend
our money. The Reserve Banks Director of Money and Cash
is Ian Wilfred and thanks for being on the show.
Why do people want the secrecy of cash?

Speaker 2 (00:33):
I think there are good reasons why people worry about
their privacy, and it's you know, it's a personal choice.
You know, money is quite a personal thing and I
think it's quite natural for people to have concerns about
people monitoring their use.

Speaker 1 (00:51):
Is that what would happen with a digital currency.

Speaker 2 (00:55):
No, No, not at all. In fact, you know, we've
been very clear that privacy is is really important to us.
We put out a big paper on it when we
did our consultation. This is what we call it digital cash.
It's to replicate cash. You know, it's private, it's quick,
you know you can it's fast, direct, you can use

(01:17):
it offline. That's what we call it digital cash.

Speaker 1 (01:20):
And what what am I? What am I holding? Or
how do how do I pay with it?

Speaker 2 (01:26):
Well, just as you you use different ways of paying
using your private bank account. Now you might use a
digital wallet, you might use a card, you might just
plug it into the internet. It would be the same
with digital cash, right, so might just be a choice
that you have.

Speaker 1 (01:43):
My debit card right now? I you know I have
cash in my bank account. Well I don't. I mean,
that's the thing. Really, I don't do it. I had
there's a number on a screen. I mean, how is it?
How is it different? I guess? How is digital cash
different to what I do with my debit hard right now?

Speaker 2 (02:01):
Well, there are a few differences. One is you could
use it person to person, So rather than transferring money
from your bank to another person's bank and then eventually
they get it, you could just do it direct. So
you've got your digital wallet on your phone, someone else
has got a phone. That's what we call peer to peer.
It's direct. You could do it offline, so when the

(02:22):
powers out, the internet's down, you'd still have that functionality.
You can't do that at the moment, you can do
it with cash, but you can't do that with your
private lack of bank accounts.

Speaker 1 (02:33):
What about then, I think I get my head around that.
What about the privacy issue people have with digital cash?
Then how do you say, we know one will know
even though it's digital, no one will know what you're
spending your money on.

Speaker 2 (02:48):
So at the moment you know, when you do any
form of digital transaction, it leads, it leads a trail, right,
there's a footprint there. But what we've said is reserve
bank who will issue the digital cash, won't see any
of the transactions because the way you'll do the transactions
is using a digital wallet, So the reserve bank won't

(03:10):
see the details.

Speaker 1 (03:11):
Of that, right.

Speaker 2 (03:12):
So that's the point that we're making, right.

Speaker 1 (03:14):
So you won't, but someone will, which I guess is
what people are worried about, which is why they like
physical cash, because you have completits it at all. Right,
So will you ever take physical cash away from us?

Speaker 2 (03:26):
Absolutely not. In fact, the two things that really matter
to people are privacy and we care about that as well,
and keeping physical cash and we care about that as well.
We're doing a lot of work on cash trials and
rural communities. We're looking at how do we make the
cash system continue to be there for people. So digital

(03:47):
cash is not an attempt to replace physical cash. It's
to give people choice of do you want digital or
physical or do you just want to use your bank
account money.

Speaker 1 (03:59):
Currently in New Zealand and you only have to accept
cash as a business for debt, that's my understanding of it.
In Norway, because of the risk of Russia and cyber attacks, etc.
They're actually moving back towards cash and they're changing the
law to make it compulsory for food outlets like a
supermarket or a petrol station to accept cash in order

(04:20):
that they encourage cash and society. You know, should they
need it, should the power goo art, et cetera. Would
we look at something similar here, Not that Russia is
a concerned but we have frequent weather events.

Speaker 2 (04:32):
Yea. We are looking at all of those issues right
at the moment. So we did a big consultation a
few years ago saying, you know, there's a whole lot
of issues in the cash system at the moment. We
need to look at things like cash acceptance and cash availability.
So we're looking at all of those issues and in fact,
a lot of countries around the world are getting more serious.

(04:54):
Australia's just made announcements about you know, retailers having to
accept cash. So we're definitely looking at all of that
because we care about the cash system.

Speaker 1 (05:04):
Thank you, Ian that's in Wolford with me, the Reserve
Bank Director of Money and Cash.

Speaker 2 (05:10):
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