New Zealand’s central bank governor, Adrian Orr, raised concerns about the stability of cryptocurrencies, particularly stablecoins, during a parliamentary committee meeting on Monday.

He criticized these tokens as “misnomers” and “oxymorons,” highlighting their vulnerability to traditional financial turmoil and potential to disrupt real-world markets, Bloomberg reported.

Stablecoins are designed to maintain a consistent value, often pegged to real-world assets like the US dollar. However, Orr emphasized that their stability hinges on the financial strength of the issuing entity, raising doubts about their reliability.

Crypto Can Not Replace Fiat

The central bank’s governor further emphasized that cryptocurrencies like Bitcoin do not fulfill the fundamental roles of money – serving as a medium of exchange, a store of value, and a unit of account.

These remarks echoed wider concerns among central banks globally. When questioned about the potential threat of independent digital currencies to the traditional financial system, Orr admitted “critical concern” due to the discrepancy between their advertised benefits and their actual functionality within the financial system.

He stressed that established fiat currencies, backed by government and central bank authority, provide essential stability and inflation control, unlike most cryptocurrencies.

While Orr acknowledged the innovative potential of blockchain technology, he urged caution regarding its application in financial systems.

Central banks worldwide are working to understand and address the potential risks and opportunities these digital assets present. Several other central banks have issued a similar warning against cryptocurrencies.

Earlie, the governor of Reserve Bank of India warned that cryptocurrencies pose a higher threat to developing economies.

Read the full article here

Share.

Leave A Reply

Your road to financial

freedom starts here

With our platform as your starting point, you can confidently navigate the path to financial independence and embrace a brighter future.

Registered address:

First Floor, SVG Teachers Credit Union Uptown Building, Kingstown, St. Vincent and the Grenadines

CFDs are complex instruments and have a high risk of loss due to leverage and are not recommended for the general public. Before trading, consider your level of experience, relevant knowledge, and investment objectives and seek financial advice. Vittaverse does not accept clients from OFAC sanctioned jurisdictions. Also, read our legal documents and make sure you fully understand the risks involved before making any trading decision