New Zealand central bank governor Adrian Orr has slammed stablecoins claiming they are not a substitute for fiat money and “are not stable.”
Speaking before a Feb. 12 parliamentary finance committee, Orr commented that stablecoins are “the biggest misnomers” and “oxymorons.”
Orr was responding to a question on whether the Reserve Bank of New Zealand (RBNZ) was concerned about decentralized digital currencies and stablecoins, to which he responded that the bank was “critically concerned.”
“Bitcoin is neither a means of exchange, nor a store of value, nor a unit of account, yet people try to use it as that,” he said.
“Likewise stablecoins, I think, are the biggest misnomers [...] Stablecoins are not stable. They are only as good as the balance sheet of the person offering that stablecoin,”
Fiat currencies such as the New Zealand dollar exist because they have the power of parliament behind them “and a credible institution such as an independent central bank to maintain low and stable inflation,” he added.
“The number one thing we can do is be as transparent and blunt as we can. They are speculative coins, not currency, and not central bank cash” he added.
Orr said this is why there is a regulatory push on stablecoins and cited the United Kingdom as a jurisdiction that was “going very hard.”
Related: An overview of the cryptocurrency regulations in New Zealand
In August 2023, a New Zealand parliamentary report advised against hasty crypto regulation. The report cautioned against trying to regulate too early and offered a number of recommendations, such as creating “coherent and consistent guidance on the treatment of digital assets under current law.”
New Zealand is currently exploring “high-level design options for the CBDC, and their costs and benefits,” as per a July 2023 report.
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