The Reserve Bank of New Zealand’s (RBNZ) Governor, Adrian Orr, voiced worries about cryptocurrencies on Monday during a meeting of a parliamentary committee. Among other things, he called stablecoins “oxymorons” and “misnomers,” saying they can’t be relied upon to hold their fixed values.
“Fiat currencies issued by central banks and backed by government authority have no substitutes,” declared Orr. The volatility of Bitcoin and other cryptocurrencies makes them unable to serve as money.
As an illustration of the vulnerability of cryptocurrency ecosystems, Orr cited the recent bankruptcy of FTX. Interconnections between traditional finance and digital assets, he claimed, could help distribute risk.
Because of the disparity between the supposed advantages of cryptocurrencies and how they really work, Orr expressed serious concerns.
He stressed that these independent digital tokens provide a problem that central banks throughout the world are evaluating. Orr advocates for a cautious approach to any financial advances based on cryptocurrency.
But Orr emphasized that, with careful application, blockchain technology might be beneficial for a variety of businesses. Cautions regarding cryptocurrency have recently been reiterated by several central bankers worldwide.
The International Monetary Fund has warned that cryptocurrency assets pose a threat to financial stability, and the RBNZ chief’s comments are in line with their concerns. Cyber speculation that infiltrates mainstream markets poses a threat to both developed and developing countries.
In the course of questioning, Orr acknowledged that the RBNZ is unable to fully regulate the use of cryptocurrencies nationwide. However, he did not back down from his position regarding their unreliability as financial instruments.