A discussion paper from New Zealand poses significant questions and fosters debate regarding the potential risks associated with the interoperability of digital Identity systems and central bank digital currencies.

[1] The Reserve Bank of New Zealand or RBNZ initiated a consultation regarding central bank digital currencies or CBDCs, [2] which concluded on July 26, 2024. This consultation is part of a larger, yet undisclosed, four-stage initiative. Details surrounding the campaign remain limited, including whether government ministers have been informed about it. The RBNZ is reportedly managing the entire process with a degree of secrecy. The Reserve Bank of New Zealand has minimized the significant risks associated with central bank digital currencies that pose challenges for democratic societies. The RBNZ refers to CBDCs as “digital cash,” which may obscure the fundamental differences between funds held in bank accounts and CBDCs.

The article [3] titled Stepping Back from the Brink: The Programmable Ledger. Four democratic risks that arise when Digital IDs are coupled to Central Bank Digital Currencies explores the potential broader implications if the Reserve Bank of New Zealand gains the authority to issue central bank digital currencies  Physicians and Scientists for Global Responsibility New Zealand Charitable Trust or PSGRNZ responded to the RBNZ consolation [4] by highlighting a critical concern revolving around the potential for controlling individuals by limiting their access to digital currency. 

The organization argues that CBDCs are expected to be programmable and linked to a person's digital identity. This programmability is facilitated by smart contracts, which are sets of executable codes that can activate upon the fulfillment of predetermined conditions. “The RBNZ’s policy papers fail to address these wider governance concerns. There has been a remarkable absence of analysis or review by academic or legal experts that considers why central bank digital cash may effectively erode the checks and balances, the necessary public accountability, that is essential for a functioning democracy,” the organization said in the letter.

There appears to be a significant lack of public trust in countries such as China and Nigeria, CBDCs have been introduced. Certain Chinese cities [5] have initiated payments to state employees using the country's digital currency; however, many of these early adopters convert the funds to cash almost immediately. In 2023, Nigerians [6] expressed their discontent over their nation's cash shortage, while also voicing objections to the government's introduction of a central bank digital currency. An Australian trial [7] has revealed that cashless economies can negatively affect low-income individuals, raising their compliance burdens and reducing their autonomy. Authorities may downplay the detrimental impact on these targeted groups, [8] even in the context of parliamentary inquiries. The Australian trial did not include programmable payments; however, automated transactions and operations related to CBDCs can be integrated to focus on specific groups. This integration, referred to as 'composability,' can be executed through self-executing smart contracts. Such capabilities allow for significant control over CBDCs in terms of scalability and speed.

Earlier in 2026, the Reserve Bank of Australia [9] concluded that there is a lack of public interest to justify the implementation of a central bank digital currency, citing that current payment systems sufficiently address the requirements of households. On page 5, [10] titled "Results from Direct Public Engagement," the consultation revealed several recurring themes regarding Australians' interactions with the payments system and their opinions on a potential retail CBDC. The findings indicated that Australians generally hold a favorable view of the payments system, which they believe adequately meets their daily payment needs. Cash continues to be regarded as an important option for addressing these payment requirements. Notably, cash is perceived as a straightforward and dependable payment method, particularly for those who prefer it over more complex digital solutions. It is also widely considered a crucial backup payment method in situations such as emergencies, technology failures, and climate-related events. 

Physicians and Scientists for Global Responsibility New Zealand Charitable Trust also points out that [11] the Reserve Bank of New Zealand has not received formal authorization or reached a definitive conclusion regarding the issuance of a CBDC, and any possible implementation is anticipated to occur around 2030. A parliamentary vote will follow a six-year observation period assessing the impact on other jurisdictions, including any effects on rights and freedoms. Additional recommendations from PSGRNZ entail ensuring that the government does not exclusively support Digital IDs, but also accepts passports and driver's licenses for access to government services and employment. Furthermore, a review of the extensive powers of the Department of Internal Affairs is necessary to evaluate the potential for information-sharing agreements between government agencies related to Digital IDs and CBDCs functionality, which could be implemented on a larger scale to achieve political objectives.