RBA rejects crypto as means of payment
Today, as new zealand raised its official interest rates for the second time in two months and promised there are more rate rises to come. Business editor ross. Greenwood joins me ross. This, of course, comes as our rba maintains, its policy of keeping rates close to zero for at least another 12 months, yeah thats, right, kieran and really what you can see is that there is actually a difference in the policy between the two central banks, though they Are close and economically theyre very similar, but in new zealand whats happened is that they are going to raise rates and continue to raise rates in the face of rising inflation. Theyve also been one of the very first to raise it. So if you go back into october rates, there were half a percent um here, of course, um sitting at 0.25. They raised them in october, raised them again in november, so literally in the space of two months, theyve gone from a quarter of a percent to 0.75 of a percent now still very, very low, but its a situation whereby youve now got a situation whereby the new Zealand reserve bank has really got quite a different attitude, almost ahead of many central banks around the world, so lets go to the reserve bank, governor of new zealand today, as he explained the reasons for this change, the near term rise in inflation has been accentuated by Higher oil prices, rising transport costs and the impacts of the global supply shortfalls, these immediate relative price shocks risk generating more generalized price inflation, especially given the current domestic capacity constraints.
In summary, the committee noted that further removal of monetary policy stimulus is expected over time, given the medium term outlook for inflation and employment. So ross fundamentally talk us through the difference between the two central banks. How are they seeing things so differently? Well, i get a sense, maybe that new zealand feels as though the inflation that is there. They expect inflation to be above five percent that they believe is now going to be baked in and especially because of higher oil prices. Of course, emergency reserves of oil were released by the united states overnight. The second aspect from new zealand is also that, while australia, i feel, believes that it can actually almost populist populate its way out of the inflation issue. Borders reopen as a result, more workers come in that takes pressure off wages and hopefully, therefore prices. I get a sense that theres a difference in attitude there as well. The interesting part you heard from adrian orr there, the reserve bank governor of new zealand, was that they expect more rate rises to come now. The markets are actually factoring them by this time. Next year, the official rate in new zealand will have risen from where it is today three quarters of a percent to two and a half percent, but at the same time the reserve bank here is still quite adamant. It wants to keep interest rates at that quarter of a percent low mark or between zero and a quarter of a percent until the end of next year.
The money markets here, however, believe that our reserve bank will be pressured eventually in the raising rates, as new zealand has done. Today. The deputy governor has reiterated the view that crypto currencies like bitcoin have no place for making payments in the future ross yep absolutely so. This is michelle bullock and shes, come out at a payments conference today and effectively said that she wont even call them cryptocurrencies, because she doesnt believe that theyre currencies crypto assets is what she calls them, and so, as a result, shes also saying that not only are They highly volatile and people could lose money from them, but she doesnt ever believe that they will have any part in terms of actual payments in australia or other major developed nations. The one thing she does say, though, is that central banks themselves could issue their own um stable coins, as theyre sometimes called. In other words, they have control of the the crypto currency, and that will be the thing that ultimately, people might use. So again. The reserve bank is quite adamant that uh crypto has no place uh really in australia at this stage. Finally, the asx has had conditions imposed on its license to operate. Of course, it did have that major outage last year, didnt it yeah it did. That was october. Last year, when the asx was pretty much put out of action for a whole day as a result of it issues now this is untenable.
They have a capital markets that simply doesnt operate now today, at a conference, joe longo, who is the new chair of the uh of asic, the corporate cop effectively announced that there was going to be these conditions placed upon the asxrs licence and said the imposition of These license conditions will confirm that remedial actions are implemented appropriately. The important thing about the asx to remember also is that for a couple of years now its been trying to create a new system whereby people have a platform using blockchain the same technology thats behind the cryptocurrency such as bitcoin.