Ian Woolford referred to a paper by the Reserve Bank of New Zealand (RBNZ) discussing cryptocurrencies and decentralized finance. Local industry organization BlockchainNZ, Ripple, and banks Westpac and Bank of New Zealand participated in this discussion. Woolford noted that surveys and studies show that cryptocurrencies not only offer new opportunities, but also pose significant risks.
“There are uncertainties in the regulation of stabelcoins and other private money innovations. It is unknown how the sector will develop, and where to find the optimal balance. We think it’s worth being vigilant with crypto-assets, and that requires expanded research to better understand how cryptocurrencies can be controlled,” Wolford said.
He added that joint efforts by regulators from different countries would help regulate the industry more effectively. Therefore, the Central Bank of New Zealand will continue to engage with other agencies, crypto-industry participants and other stakeholders.
Wolford said it makes sense to look at best practices for regulation, such as the Financial Market Infrastructure Act, which could clarify rules for overseeing the crypto-asset market, a top RBNZ executive convinced. Issues arising from digital assets are not within the agency’s purview. But protecting consumers and investors is also important to building a robust monetary and payment system that will better meet the changing needs of New Zealanders, Wolford reasoned.
Recall that New Zealand’s central bank launched a public consultation on launching its own digital currency in 2021.