New Zealand Central Bank Governor Dismisses Stablecoins as Unstable
New Zealand central bank governor Adrian Orr has criticized stablecoins, referring to them as misnomers and oxymorons. He explained that stablecoins are not a substitute for fiat money and are only as stable as the balance sheet of their issuer. Orr expressed his support for fiat currencies, emphasizing that they are more credible because they are backed by the government and maintained by independent central banks.
Concerns Over Stablecoin Stability
Orr’s comments came in response to concerns about decentralized digital currencies and stablecoins. Various stablecoins have faced challenges in maintaining their pegs, raising doubts about their financial health and ability to redeem stablecoins for fiat currency. TrueUSD and USDC are examples of stablecoins that experienced difficulties in maintaining stability, creating uncertainty in the market.
Fiat Currency Backed by Government
Orr highlighted that fiat currencies, like the New Zealand dollar, exist because they are supported by the power of the government and reputable institutions such as central banks. He emphasized the transparency and credibility that comes with fiat money, contrasting it with the speculative nature of stablecoins. Orr noted the global regulatory efforts to address stablecoins and highlighted New Zealand’s exploration of central bank digital currencies (CBDCs) along with their associated costs and benefits.
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