New Zealand's Central Bank Governor Casts Doubt on Stability of Stablecoins
Summary:
Adrian Orr, Governor of New Zealand's central bank, has criticized stablecoins, emphasizing their instability and asserting that they cannot replace traditional fiat currencies. In a parliamentary finance committee meeting, Orr showed grave concern about decentralized currencies and especially stablecoins. He further indicated the necessity of clear-cut regulations, citing the UK's significant efforts in this area. The nation is currently examining options for Central Bank Digital Currency (CBDC), according to reports.
Adrian Orr, the governor of New Zealand's central bank, has expressed his skepticism about stablecoins, bluntly stating that they cannot replace conventional fiat currency and that their stability is questionable. During a parliamentary finance committee meeting on February 12, Orr was vocal in asserting that the concept of stablecoins is paradoxical and misleading. In response to a query about the Reserve Bank of New Zealand (RBNZ)'s stance on decentralized cryptocurrencies and stablecoins, Orr expressed critical concern.
According to Orr, Bitcoin fails to fulfill the essential functions of money; it is not a medium of exchange, a store of value, or a unit of account despite the attempts to use it as such.
Focusing on stablecoins, he boldly addressed their inherent instability, insisting that their reliability is directly tied to the robustness of the issuer's balance sheet. Unlike fiat currencies like the New Zealand dollar, which have the commitment of the parliament and the credibility of an independent central bank maintaining low and stable inflation.
Adrian Orr took the firm standpoint that there needs to be absolute clarity and straightforwardness: these are speculative coins, not actual currencies or central bank cash. He thereby explained the increasing regulatory emphasis on stablecoins, pointing to the UK for its rigorous approach.
In relation to broad cryptocurrency regulations in New Zealand, a parliamentary report from August 2023 recommended cautious judgment before rushing into regulation. It encouraged a consistent, comprehensive approach to the handling of digital assets under existing laws. At present, New Zealand is investigating various preliminary options for a Central Bank Digital Currency (CBDC), assessing their respective costs and benefits, as revealed in a report from July 2023.
Published At
2/12/2024 8:57:15 AM
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