Adrian Orr, the governor of the New Zealand central bank has raised major concerns over digital assets, especially stablecoins. He added that in no way the fiat-pegged stablecoins could be a substitute for real fiat money.
Stablecoins’ Stability Misconception
Adrian Orr, Governor of the Reserve Bank of New Zealand, cautioned against the perceived stability of stablecoins, labeling them as “the biggest misnomers” and “oxymorons.” Orr made these remarks during a parliamentary committee session held on Monday in Wellington, shedding light on the inherent risks associated with stablecoins.
Contrary to their name, stablecoins, which are crypto tokens pegged to other assets, do not always maintain a stable value, Orr emphasized. He pointed out that the stability of stablecoins hinges solely on the financial health of the entity backing them, highlighting the reliance on the issuer’s balance sheet.
Stablecoins typically rely on substantial reserves to uphold their value, but they
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