What China’s Cryptocurrency will do to New Zealand
The news overnight that China has changed its attitude to cryptocurrencies should raise alarm bells with the New Zealand banking and trade sectors.
China has also passed a new law, which will come into effect on 1 January, aimed at "facilitating the development of the cryptography business and ensuring the security of cyberspace and information".
Cryptocurrencies were illegal in China until recently. Now President Xi Jinping has said that China should accelerate the development of blockchain – and Chinese central bank officials are telling commercial banks to embrace digital finance and currencies.
Cryptocurrencies are effectively programmable money and those that control the most widely used currencies will control a great deal of the global economy.
Already the head of the Bank of England and the new head of the European Central Bank have expressed a view that there is a place for central bank-backed digital currencies.
New Zealand’s high-trust financial reputation and early adoption of new economic models and technology means we are well placed to ensure that the digital currencies we adopt reflect our values.
New Zealand benefits from its currency being in the top ten traded currencies globally. New Zealand needs to think about how we can protect or enhance that position in a world where China, Facebook’s Libra and others will compete to be dominant programmable money supplies.
Dave says that global money supplies are shifting and as a trade-based economy, New Zealand needs to ensure that our Reserve Bank, Treasury and the FMA have stewardship over the New Zealand economy.