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Central Bank of New Zealand Governor Criticizes Stablecoins and Bitcoin
Adrian Orr, the New Zealand Central Bank Governor, recently expressed skepticism about the role of digital currencies in the financial system. He specifically challenged the reliability of stablecoins, suggesting that they fall short of being a true alternative to conventional fiat money.
Central Banker Casts Doubt on Stablecoin Reliability
Orr’s critique hinges on the alleged stability of stablecoins, which he describes as highly misleading. He argues that their value is fundamentally linked to the credibility of the issuing bodies and can fluctuate unexpectedly, undermining their notion of stability.
He further noted that the stability of these crypto assets is intricately tied to the trust in the issuer’s financial health, casting doubt on their ability to provide the same level of security and reliability as traditional currency reserves.
Central banks worldwide share Orr’s concerns, warning that the interconnectedness of stablecoins with traditional finance could propagate instability, especially during economic turbulence.
Bitcoin’s Role in the Financial Ecosystem Questioned
Furthermore, Orr critiqued Bitcoin’s capacity to serve as a mainstream currency. He pointed out that Bitcoin is inadequate as a secure medium of exchange and lacks the stability required to be a dependable store of value.
Even with Bitcoin’s growing acceptance in some sectors, Orr remains unconvinced of its ability to match the performance and trustworthiness of existing currencies, thus discounting its potential to either replace or supplement central bank-issued money.