New Zealand Central Bank Chief Warns Against Stablecoins and Bitcoin

Adrian Orr, the Governor of the Reserve Bank of New Zealand, expressed significant worries regarding stablecoins and Bitcoin, stating that they might destabilize the world's financial sector. He addressed a parliamentary committee in Wellington, emphasizing that stablecoins backed by fiat currencies could never replace traditional paper money. Contrary to the term "stable cryptocurrencies," Orr pointed out that the value of these crypto assets is not always stable, solely depending on the financial condition of their issuer.

Orr highlighted that stablecoins rely on the reserves of the issuing organization and remain vulnerable to failures in the traditional financial market. He criticized the term "stablecoins" as misleading, akin to an oxymoron, where the statement contradicts its meaning. The head of the central bank of New Zealand further doubted the usefulness of Bitcoin as a currency. In his view, Bitcoin lacks fundamental currency characteristics, such as being a reliable medium of exchange and store of value.

Despite its popularity and widespread use in certain circles, Orr argued that Bitcoin cannot replace or even complement traditional currencies. This is because fiat currencies are backed by legislative authority and government agencies, he explained. It's worth noting that in 2021, the Reserve Bank of New Zealand began public consultations on launching a digital New Zealand dollar. Last year, Ian Woolford, a top manager at the Reserve Bank of New Zealand's financial department, advised caution regarding cryptocurrencies and urged the prompt development of regulatory rules for them.