New Zealand Central Bank Chief Deems Stablecoins "Misnomers" and Issues Regulatory Concerns

Reserve Bank of New Zealand Governor Adrian Orr criticizes stablecoins, emphasizing their lack of stability.

Reserve Bank of New Zealand Governor Adrian Orr has taken a critical stance on stablecoins, dismissing them as inadequate substitutes for fiat currency and labeling them "the biggest misnomers."

Speaking before a parliamentary finance committee on February 12, Orr expressed concern about decentralized digital currencies and stablecoins, emphasizing the Reserve Bank's significant apprehension.

Orr referred to Bitcoin and stablecoins as "neither a means of exchange, nor a store of value, nor a unit of account," and underscored that attempting to use them as such is misguided.

"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," Orr commented.

He highlighted the foundational strength of fiat currencies like the New Zealand dollar, attributing their stability to parliamentary backing and the oversight of credible institutions, such as an independent central bank maintaining low and stable inflation.

Emphasizing transparency, Orr categorically stated, "They are speculative coins, not currency and not central bank cash," and stressed the need for regulatory scrutiny on stablecoins, citing the United Kingdom as a jurisdiction taking a rigorous approach.

In August 2023, a parliamentary report in New Zealand advised against hastily regulating cryptocurrencies, urging a careful approach. The report recommended establishing consistent guidance on the treatment of digital assets under current laws.

As of July 2023, New Zealand is in the early stages of exploring high-level design options for a Central Bank Digital Currency (CBDC) and evaluating its associated costs and benefits.

(Photo Source / Blockonome)