New Zealand’s Economy and Economic Policies: Money System

Money System in New Zealand

Since 1967, The official currency of New Zealand is the New Zealand dollar NZD or NZ$). Cook Islands, Niue, Tokelau and the Pitcairn Islands, also use the New Zealand dollar as their currency. The New Zealand pound was the currency used before the emergence of the New Zealand dollar. In the thirties, the idea of changing the New Zealand pound to decimal currency was presented. In 1964, decimal currency was agreed and after that other names were also recommended, like kiwi or zeal so that confusion between the US dollar could be avoided. However, on 10th July 1967, they finally launched New Zealand dollar as the national currency in order to replace the New Zealand pound. Two New Zealand dollar was equal to one New Zealand pound. One New Zealand dollar comprises 100 cents. Currently, five notes, as well as five coins, are used for the flow of currency in New Zealand. In which 10c, 20c, 50c, NZ$1 and NZ$2 are the denominations of the coins and NZ$5, NZ$10, NZ$20, NZ$50 and NZ$100 are the denomination of banknotes used. NZ$20 and NZ$50 are the denominations that are mostly used in the country. The employers pay wages and salaries directly to the bank account of employees and an account is considered essential for an employee in order to access and utilize these funds. Swedish Rounding is introduced in order to allow prices that fall between 10 cent margin due to the removal of 1c, 2c and 5c coins. If the cost of the product ends in 1,2,3 or 4 cents, then the cost will be rounded downwards to the closest 10 cents and if the amount of the product ends in 6,7,8 or 9 cents, then the amount will be rounded upwards to the closest 10 cents. If the cost of the product ends in 5, then it will be either rounded upwards or downwards to the closest 10 cents according to the preference of the seller.For every goods and service purchased in the country, there is a Goods and Services Tax which is 15%. Recently mobile payment is getting wide acceptance throughout New Zealand. However, cards are the common means of payment used for small purchases. Visa and Mastercard are widely used and almost all significant credit cards are accepted across the country. Usage of security PIN system in New Zealand sometimes causes difficulty to use overseas credit cards, so it is better to carry some cash to use during emergencies. In some tourist places and restaurants, traveller cheques are accepted and it is not widely accepted throughout the country. It is better to use credit cards or cash for simple transactions. It is easy to withdraw cash from almost all places since there is a massive chain of ATMs established across the country. New Zealand has one of the worlds latest and advanced banking systems. There are 24 banks that are officially enlisted and are running in the country. Among them, Australian-owned banks have taken control over the New Zealand banking business since they are neighbouring countries and they completely possess four of the biggest banks across New Zealand which are ANZ, Westpac New Zealand, ASB and the Bank of New Zealand.

New Zealand’s Economy and Economic Policies

New Zealand’s economy changed from being a highly controlled economy to the slightly controlled economy which is based on free market principles among the other OCED countries during the last 3 decades. The economy of the country is highly aggressive and export-oriented which accounts for about 30% of the GDP. Economic growth of almost 3% was predicted for 2018. The OCED mentioned that the export growth may slow down, however the high demand for tourism and rise in the export of dairy products will contribute to the overall growth of the economy. After the recession of 2008/09, New Zealand’s economy made a huge comeback and has an average of 2.1% of annual growth,from March 2010 which highlights the economic flexibility. Well built trade, construction and increase in tourism contributed to the economic growth of 2.7% at the year-end of September 2017. The strength of these factors have proven much more than it was predicted and an estimated growth of 2.9% for 2018 and 3.6% for 2019 is anticipated by the government.

The economic policy of New Zealand is graded high even though it is geographically remote and small in size. Compared to the statistics of 2014 the grades have increased by 0.2%. In order to ensure economic growth and reduce debt, the government has taken actions with extreme care. The debt levels are reasonable in comparison with the benchmark set by the OCED and the economic growth is stable in the past few years. The diminishing levels of debt are compensated with the adequate surpluses of the previous years. Since the crisis of 2008, the Unemployment rate has decreased to its smallest rate which is beneath 5%. The flow of greatly experienced workers to Australia gradually ceased. Unemployment rates of youth declined to a great extend with the aid of Labor-market policies, however, unemployment of aboriginal community continued to be a concerning issue. Taxes are considered relatively small.Tax deductions were detained in order to have a budget surplus, during this time a property tax was enforced to manage speculation which was continued eventually.In 2014 private sector expending have increased above 29%, however, Research and Development is deficient. A visa focussed on temporary workers was altered to order them to depart the country prior to applying for a new visa for a dissimilar post.

References:

1. https://www.globalexchange.es/en/currencies-of-the-world/new-zealand-dollar
2. https://transferwise.com/us/blog/money-and-banks-in-new-zealand
3. https://www.thriftytours.co.nz/blog-new-zealand-currency-317
4. http://www.sgi-network.org/2016/New_Zealand/Economic_Policies