The government-backed "digital cash," which would be placed alongside notes and coins, is what the central bank describes as the currency.

Ian Woolford, director of money and cash at the Reserve Bank, explains how a CBDC can "support competition and innovation by enabling our powerful fintech sector."

He goes on: "In the same way that you already use currency, digital cash would be primarily used for payments by individuals and businesses. It could also be used to pay for purchases made online, in-person, or even to give your child pocket money. It might be used for novel purposes, such as sending an instant digital payment to any person in New Zealand."

Woolford emphasizes that any digital currency would function over Bluetooth, be private and safe, and allow payments to be conducted without an internet connection.

While there is still time to provide comments on the topic until July 26th, the bank is approaching the initiative cautiously and has committed to a "multi-stage exploration until around 2030".