This discussion paper raises major questions about the long-term risk to democratic nations that arise should central banks secure the power to oversee central bank digital currencies (CBDC) platforms and release CBDCs. PSGR hope to increase awareness about the offshore institutions that have political and financial interests in the large-scale adoption of these CBDCs and hope to encourage debate regarding the potential risks that arise from the inter-operability of Digital Identity (ID) systems and central bank digital currencies (CBDCs).

PSGRNZ (2024) Stepping Back from the Brink: The Programmable Ledger. Four democratic risks that arise when Digital IDs are coupled to Central Bank Digital Currencies. Bruning, J.R., Physicians & Scientists for Global Responsibility New Zealand. ISBN 978-0-473-71618-9. 2 page summary | Press release | Executive summary (Substack)

CBDCs are the policy darling of the global Central banks and the Fintech industry. Meanwhile, democratic society, non-RBNZ researchers, and in particular, public law experts have been left scrambling.

This discussion paper explores the history and actors who have globally worked to drive both the informational environment and the development of digital identity systems and central bank digital currencies, and considers the conflicts of interests (political and financial) that interact across and between these global institutions which include central banks, global banks and management consultancy firms.

The discussion paper reviews the Reserve Bank of New Zealand's (RBNZ) recent shifts to expand regulation and power, and questions what the broader impacts might be, should the RBNZ secure the power to release CBDCs. The Stepping Back from the Brink paper queries the extent to which members of Parliament are informed about the wider issues that are at stake. This includes drawing attention to the absence of any research, discussion or debate looking at the bigger picture, from academic experts, including experts in governance and constitutional law.

The RBNZ already have extensive responsibilities, which are already more extensive than most Central banks. Might there be conflicts of interest if they can also issue retail CBDCs?

The discussion paper cites the example of a recent cashless trial in Australia, and the impact on indigenous communities, and considers how citizens in other foreign jurisdictions have coped with and accepted, central bank digital currencies. Evidence from the Australian trial revealed that cashless economies can adversely impact low-income groups, increasing people’s compliance burdens, while reducing their autonomy. The adverse effect on targeted groups can then be downplayed by authorities, including during parliamentary inquiries. It’s evident that there is a low level of public trust in the countries where CBDCs have been imposed on people, which include China and Nigeria.

While the Australian trial did not involve programmable payments, automated CBDC transactions and operations can certainly be bundled together to target groups. This ‘composability’ can be deployed via self-executing smart contracts. These functions enable control over CBDCs at scale and pace.

The question of the RBNZ having power to effectively print digital money outside Parliamentary confines is also considered, and the implications for democracy, transparency and public oversight.

New Zealand’s Central bank, the Reserve Bank of New Zealand (RBNZ) opened a consultation which closed on July 26, 2024. This consultation is part of an apparently undisclosed four-stage campaign. It remains unclear as to the extent to which government Ministers were briefed on the campaign and its goal and end-points. The RBNZ appear to be holding the entire campaign close to their chest. PSGR's report outlined that the RBNZ appeared to downplay the key risks that make CBDCs dauntingly troublesome for democratic societies. Techniques were used that were potentially misleading. For example, the RBNZ call CBDC ‘digital cash’ undermining and obfuscating the major difference between digital cash in bank accounts – and CBDCs.

PDF: PSGRNZ's response to the July 2024, second stage RBNZ consultation.

The paper’s lead author and PSGRNZ spokesperson Jodie Bruning stated:

‘The unknowns are extraordinary, and the RBNZ seem to be gliding over the surveillance potential when Digital IDs and CBDCs are interlinked. Privacy and human rights concerns have not been addressed. While government communications stress privacy in retail transactions, far too little attention has been paid to the problem of broader government surveillance, including through backdoor access points.’

Interviews with Bruning on the discussion paper can be accessed here and here and here. For an interview and to discuss this paper please contact PSGR at This email address is being protected from spambots. You need JavaScript enabled to view it..

PSGRNZ ask that the public of New Zealand and their representatives make time to ask whether CBDCs open up a Pandora’s box that produces real risks for civil, constitutional and human rights. Our concerns include:

Knowledge that Digital IDs coupled to CBDCs enhance all-of-government oversight over private activity including through back-door arrangements.
That programmable smart contracts can be used at scale to achieve targeted political objectives and limit rights and freedoms, hence carrying real risk for abuse.
That due to the complexity of the digital infrastructure, there is little possibility for parliamentary oversight.
A risk of an inevitable shift in delegation of responsibilities to the Bank of International Settlements (BIS) and International Monetary Fund (IMF) through guidance, global harmonisation, and best practice arrangements, and away from sovereign governments.

PSGRNZ recommend a minimum six-year moratorium of any CBDC trial.

PSGRNZ consider that New Zealand should pause any development or trials of CBDCs and regard the inter-operable Digital ID-CBDC potential, with cautious scepticism. These technologies have not arisen in a response to public need. Rather, the policies, potential and resultant language about what can be achieved, have been driven by large institutions who have significant political and financial conflicts of interest, who are independent of democratic parliaments.

PSGRNZ recommend:

A. That a minimum 6-year moratorium, at least until 2030, is placed on any CBDC trial or project in New Zealand. This is in order to observe for an extended period of time how this technology and related financial system intersects with the political and democratic landscape, and impacts civil, constitutional and human rights in early adopting countries.

B. That the RBNZ is not granted authority to issue CBDCs until after 2030. That any parliamentary vote is taken after long-term observance of the impact in other jurisdictions, including impact on rights and freedoms.

C. That government agencies equally accept traditional identification, passports and drivers’ licences in parallel with Digital ID’s and should not, through the design of policy or online internet portals, favour Digital IDs over traditional primary forms of identification.

D. That the broad powers held by the Department of Internal Affairs requires some examination in the context of information sharing agreements between government agencies and the potential for Digital IDs and CBDCs to be deployed to fulfil political objectives. These 4 recommendations are made because there is no expert independent comment on the implications of the inter-operability of this intended networked architecture. There is a dearth of research in academia. In the gap, management consultancies that are listed as a top 100 strategic partner of the World Economic Forum, an industry think-tank, should not step in and offer their services as a proxy for public-good expert review.

STEPPING BACK FROM THE BRINK: Four democratic risks that arise when Digital I.D.'s are coupled to central bank digital currencies (2024)

PDF: PSGRNZ's response to the July 2024, second stage RBNZ consultation.

Read the discussion paper: Stepping Back From The Brink.

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