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New Zealand Central Bank Governor Slams Stablecoins

source-logo  coinengineer.io 12 February 2024 13:30, UTC

Reserve Bank of New Zealand Governor Adrian Orr has warned against the use of stablecoins and other digital assets as a replacement for fiat currency, citing their inherent instability and lack of government backing. Speaking at a Parliamentary Finance and Expenditure Committee hearing, Orr emphasized that stablecoins cannot replace fiat currency, which benefits from state backing and central bank control.

New Zealand Central Bank Governor Adrian Orr Shares His Thoughts on Stablecoins

The remarks by Adrian Orr, Governor of the Reserve Bank of New Zealand, were prompted by concerns over the growing popularity of decentralized digital assets such as Bitcoin and stablecoins as an alternative to traditional currencies. Despite their widespread adoption among speculative investors, Orr noted that Bitcoin and stablecoins do not function effectively as a medium of exchange or store of value.

Expressing reservations about stablecoins, Orr highlighted their dependence on the financial health of issuers, warning that they are subject to the stability of underlying balance sheets. Describing stablecoins as “the ultimate misnomer and oxymoron”, Orr emphasized their speculative nature and distinguished them from legitimate currencies issued by central banks.

Advocating for regulatory clarity, Orr urged regulators to establish strict rules for stablecoins, similar to those implemented in the United Kingdom. He emphasized that punitive measures should be taken against violators to protect investors and maintain market integrity.
In terms of crypto regulations in New Zealand, the Central Bank is actively exploring opportunities to modernize the New Zealand dollar (NZD) and ensure its competitiveness in the global market. Efforts have been made to collaborate with various stakeholders in developing a digital NZD. However, the country remains cautious about the risks associated with crypto and stablecoins, while recognizing their potential as alternative forms of money.