According to a Bloomberg report, Adrian Orr, Governor of the Reserve Bank of New Zealand (RBNZ), raised concerns over cryptocurrencies during a parliamentary committee meeting on Monday.
Adrian particularly criticized stablecoins, referring to them as “misnomers” and “oxymorons” that cannot reliably maintain their pegged values.
“Stablecoins are not stable. They’re only as good as the balance sheet of the person offering that stablecoin,” Orr asserted.
Orr pointed to the recent FTX bankruptcy as an example of the fragility of cryptocurrency ecosystems. He suggested that interlinkages between digital assets and traditional finance could spread risks.
Orr was asked whether central banks are concerned that independent digital currencies could undermine the global financial system.
“The answer is yes, critically concerned,” he said. “Mostly in that what is advertised on the tin is not what is in the tin for these purported alternatives to central bank cash.”
He emphasized that central banks worldwide are assessing the challenges posed by these independent digital tokens. Orr called for measured consideration of any crypto-based financial innovations.
Orr said Bitcoin is not a means of exchange, a store of value or a unit of account “yet people try to use it as that. It’s got other purposes but it is not at all a substitute for, not even a compliment to, central bank money.”
However, Orr highlighted blockchain technology’s potential usefulness across industries if implemented prudently. Other central bankers globally have recently echoed cautions about cryptocurrencies.
The RBNZ chief’s remarks align with the International Monetary Fund’s warnings about crypto-assets endangering financial stability. Advanced and emerging economies alike face vulnerabilities from crypto speculation penetrating mainstream markets.
Orr conceded during questioning that the RBNZ cannot completely control cryptocurrency usage within New Zealand. Yet he firmly reiterated his stance on their unreliability as monetary tools.
Also Read: The FBI Issues Warning to LinkedIn Users About Crypto Scams
