Geoff Bascand: In search of gold - exploring central bank digital currency

Speech by Mr Geoff Bascand, Deputy Governor and Head of Operations of the Reserve Bank of New Zealand, at The Point Conference, hosted by Payments New Zealand, Auckland, 26 June 2018.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Introduction

Kia ora and thank you to Payments New Zealand for the invitation to speak. Payments systems are highly interconnected by nature, so it is fitting that we are all here connecting with each other-learning, listening and discussing the hot topics in payments.

The payments system is an integral part of our financial system. It is also one that is evolving at considerable pace. We have already heard this morning about changing consumer demands and advances in financial technologies. Retail payments have become faster, and much easier to access. We can now initiate payments in a variety of ways - we can simply tap our credit cards, hold up our mobile phones, or pay for things remotely using a mobile banking app. Sellers at farmers' markets can now receive card payments by plugging a small device into their mobile phones, and charities can now collect donations on the street using Q-code technology. All of these developments have made transactions more convenient, faster, and accessible for consumers and merchants. But they have mostly been concentrated at the front-end of the payments process.

Crypto-currencies, and the blockchain technology they rely on, are bringing about more far-reaching changes in the payments system and the way we view money. Blockchain technology is unique because there is no central agent managing the system, and there is no separation between sending the payment instruction and the final settlement of funds. It's a different type of payment system and could bring new opportunities to payments and currency.

This period of change can be compared to an earlier time when exploration was fast-paced and the stakes were high-the 1860s, when the gold rush hit New Zealand. During this period, miners came from all over the world to find gold in our valleys and rivers. Gold, a form of money (in respect, then, of its payment and store of value properties), could be found by anyone with a bit of luck, determination and hard work.