- six per cent of central banks are exploring cbdcs and many countries have already undertaken operational tests, developed proof of concepts, or run trials. 14 private players have also developed sophisticated products for differing interests. falling behind is also not an option for us and for that reason we will soon be commencing proof - of - concept design and testing for a cbdc as part of our assessment of the case for a cbdc in new zealand. the technology exists now to implement a cbdc, but it needs to be well designed and thought through, user - friendly, bulletproof to cyber and operational risk, with privacy and other controls that ensure and promote widespread trust and use. cash system issues i want to emphasize again that the reserve bank is not proposing to remove physical cash from our economy. cash is central bank money that is a safe and trusted value anchor. cash plays a critical role in supporting financial and social inclusion. cash allows people to engage in the economy without having to rely entirely on banking services for all their day - to - day activities, without the need to be able to access a computer or smartphone, and with the safety and security of knowing that the cash you have is worth what it says it is. it provides choice, supports competition with other forms of money, offers a back - up for users of other means of payments, and allows all users a degree of autonomy and privacy. _ _ _ _ _ _ _ _ _ _ _ _ bank for international settlement bis innovation hub work on central bank digital currency ( cbdc ) although cash is used less in percentage terms ( from 30 % in 2007 for households payments to 13 % in 2019 ), the amount of cash in the hands of the public has been growing at an average of 3. 7 % per year since 1995. 15 graph 2 : cash in the hands of the public cash in the hands of the public, 2017 prices, $ per person 1995 to 2021 1, 400 $ per person 1, 200 1, 000 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 avg $ per person, 2017 prices we know that new zealanders consider cash to be important and they support its ongoing availability. we at te putea matua are committed to ensuring cash remains available for as long as people need it. however, our earlier work has identified some challenges facing the cash system. an innovative approach is needed to support a more efficient and resilient cash system. graph 3 : the current cash system _ _

in more detail shorly. but, first, i want to revisit the role of central bank money and why it matters. the public role of central bank money our monetary system is made up by both central bank and private money. currently private money exists only in digital forms, while central bank money used by the public is in physical bank notes and coins. while central bank money might take more widely used digital forms in the future, this does not change its essence. the following “ money taxonomy ” graphic illustrates these different types of money. central bank money performs two critical roles to support public confidence in the money of the future. that is, first, central bank money provides a safe and trusted value anchor for the monetary and financial system and, secondly, it provides a fair and equal way to pay for all that supports inclusion. these two unique attributes are central to understanding why central bank money matters so much and why we at te putea matua are investing so much effort in understanding and addressing these issues. maintaining a healthy monetary system is at the core of what it means to be a central bank, and providing and stabilising money, both public and private, is central to this. the reserve bank ’ s reason for being can be traced back to the need for a public monopoly over the production of banknotes and coins when the reserve bank was created in 1934. today, banknotes and coins remain the only form of central bank money that the public can access directly – although we have long used electronic central bank money in the accounts we transact with, and settle transactions between, major banks. central bank money has always _ _ _ _ _ _ _ _ _ _ _ _ the links to the documents can be found here : https : / / www. rbnz. govt. nz / notes - and - coins / future - of - money coexisted with private money. private money is currently far more significant in volume, transacted through bank accounts which are already digital. central bank money continues to play a crucial role. it supports public trust and confidence in private money through the promise of one - for - one convertibility. central bank money brings some distinct advantages to this partnership : it is liquid, stable, uniform and backed by the state. it is all that and more because it is created in the public interest. that promise of one - for - one exchange is further underpinned by ensuring that private banks are managed prudently, through our regulation and