New Zealand’s central bank is looking at the potential of creating a digital currency, with officials in a report Thursday saying such a project could foster further innovation in the country’s payments system.

The Reserve Bank of New Zealand sought public feedback on papers focusing on the future of money which included a proposed digitized currency at a time when the use of cash is declining.

“A Central Bank Digital Currency would see the features and benefits of cash enjoyed in the digital world, working alongside cash and private money held in commercial bank accounts,” RBNZ Assistant Governor Christian Hawkesby said in a statement.

The use of cash dropped to 19% of household transactions in 2019 from 30% in 2007, it said. Meanwhile, people have increasingly turned to phone-based payment apps and digital wallets as well as other new and private technologies that make transactions more convenient. The RBNZ named Apple Pay as an example of a tool for transactions…read more.

The Federal Reserve on Wednesday held off on a final decision to start tapering asset purchases, but policymakers are evenly split over whether the cycle’s first rate hike should come next year, not in 2023. The Dow Jones, up strongly before Wednesday’s 2 p.m. policy news, rallied further despite the mixed hawkish-dovish Fed meeting outcome.

The Dow and broader stock market may stay volatile as investors react to Fed chief Jerome Powell’s press conference. Powell is seen as one of the Fed’s most dovish members, behind the shift to not just tolerating but welcoming inflation above the 2% target.

The dot-plot, tracking each Fed policy committee member’s individual outlook, had 9 of 18 penciling in one quarter-point rate hike in 2022. That was up from 7 of 18 favoring a 2022 tightening in June projections. However, 3 of the 9 favoring a 2022 rate hike actually think two rate hikes will be warranted next year. That lifted the median projection to 0.3% from the current rate, which targets the midpoint of 0%-0.25%.

One caveat: While Powell and other Fed governors vote at every meeting, regional bank presidents get to vote on a rotating basis…read more.

When it comes to the state of the economy, particularly during a federal election campaign marred by the COVID-19 pandemic, a former Bank of Canada governor likens it to be a “tripod of angst.”

Stephen Poloz, who spent seven years at the helm of the central bank until 2020, said many Canadians are “understandably distraught” by the handling of federal finances.

“There is a sort of tripod of angst among regular folks: high government debt, the possibility that we’ll have higher taxes, and higher inflation connected to that debt,” Poloz said in an interview Tuesday. “People need some reassurances.”…read more.