NZ government takes on bitcoin as reserve currency backstop. Purchases a growing bitcoin stash covertly with current account surplus/overseas funds.
After the stash is sufficient a law is passed and announcement is made. Every year the NZD cash rate to redeem bitcoin is set at a certain ratio. Citizens can redeem notes for btc.
If btc goes down, NZD goes down, which is good for exporters. Which leads to increased btc holdings for the next year. This creates a country buying during downward market situation.
If btc goes up, NZD will tend to go up also, but it is not directly correlated. We don't know what the next redemption ratio will be. The government could at the year end set it low, which would wipe out the redemption value of the nzd and control it's price going up too much.
Cash redemption would initially be the only method and would have to be done in person in New Zealand and notes checked for counterfeiting. This would not stop people overseas from doing it themselves overseas and the possibly aggregating in nz before the ratios are reset. Possibly creating more volume towards the end of each period.
This situation can be continued taking advantage of btc movements to support money printing and currency stability. Note there is a two way effect here as the countries own currency fluctuations can move the btc price. It can effectively put a floor on the btc price.
The nzd will next become a crypto currency itself and this would be exchanged for btc in existing markets. At this time the nzd becomes free floating against btc. The ratio can be removed and the government btc stash sold. The country could have made a huge amount on capital gains on btc, printed a lot of nzd and spent it all over and by this stage there is little need for a national reserve as citizens have their own bitcoin.
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