New Zealand Central Bank Governor Criticizes Stablecoin Stability

Central Bank Skepticism

During a parliamentary session, Adrian Orr, the governor of the Reserve Bank of New Zealand, expressed doubts about the reliability of stablecoins. Orr pointed out the inherent contradiction in the name 'stablecoins', arguing that their stability is only as robust as the financial health of the issuing entity.

Stability Under Scrutiny

The stability of certain stablecoins has been challenged, such as TrueUSD (TUSD), which lost its peg to the dollar, and USDC, which dipped when Circle's reserves were impacted by a bank failure. In contrast, Orr emphasized that fiat currencies like the New Zealand dollar have solid backing through parliamentary authority and central bank support.

Industry Responses

The discussion on stablecoins' solidity extends to the U.S. Federal Reserve and academia, aiming to create systems that guarantee their stability. Cautionary yet optimistic, CEO Howard Lutnick of Cantor Fitzgerald, overseeing some of Tether's assets, assured their financial credibility in a Bloomberg TV interview.