New Zealand’s central bank governor raised eyebrows regarding the stability of cryptocurrencies, particularly stablecoins, during a parliamentary committee meeting this week.
Stablecoins Deemed ‘Misnomers’
Reserve Bank of New Zealand Governor Adrian Orr termed stablecoins as “misnomers” and “oxymorons”, highlighting their vulnerability to market turmoil and potential to disrupt markets, according to Bloomberg.
Stablecoins aim to maintain a steady value by pegging to assets like the U.S. dollar. However, Orr questioned their reliability due to dependence on the issuer’s financial strength.
Central Banks Worldwide Concerned
Orr acknowledged wider central bank concerns about independent digital currencies threatening the traditional financial system. He expressed “critical concern” over the gap between how cryptocurrencies are marketed versus how they actually function.
The governor stressed that fiat currencies, backed by governments and central banks, provide stability and inflation control unlike most cryptocurrencies.
While welcoming blockchain tech’s innovation benefits, Orr advised caution in applying it to financial systems.
Orr’s views align with other central banks examining digital assets’ risks and opportunities. The Reserve Bank of India governor also warned that cryptocurrencies particularly threaten developing economies, @RBI tweeted.
Bloomberg first reported Orr’s remarks, which Cryptonews then summarized.