Adrian Orr, Governor of the Reserve Bank of New Zealand (RBNZ), raised concerns over cryptocurrencies during a parliamentary committee meeting on Monday. He particularly criticized stablecoins, referring to them as “misnomers” and “oxymorons” that cannot reliably maintain their pegged values.
“There is no substitute for fiat currencies issued by central banks and backed by government authority,” Orr asserted. “Bitcoin and other cryptocurrencies do not fulfill the roles of money and introduce risks due to their volatility.”
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.
“I have a critical concern about cryptocurrencies due to the imbalance between their purported benefits and their actual operation,” Orr stated.
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.
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.
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