New Zealand Governor expresses concerns about cryptocurrencies
The Governor of New Zealand, Adrian Orr, has shared his concerns about cryptocurrencies, particularly stablecoins. He believes that these types of digital assets are unstable and cannot be fully relied upon in a safe manner.
Orr pointed to the recent bankruptcy of the cryptocurrency exchange FTX as an example of the fragility of cryptocurrency ecosystems. According to him, the connections between digital assets and traditional finance can lead to the spread of risk, especially in the case of unstable digital assets.
Threats to financial stability
Orr noted that many central banks worldwide are currently analyzing the challenges associated with independent digital tokens. The Governor’s position aligns with warnings issued by the International Monetary Fund regarding potential threats to financial stability arising from cryptographic assets.
Nevertheless, Orr also sees the potential of blockchain technology, which serves as the foundation for most cryptocurrencies, to be applied in various industries. He states that this technology can have a significant impact on innovations in sectors other than finance.
Fundamental limitations of Bitcoin
During his remarks, Orr emphasized that he does not consider Bitcoin to be a medium of exchange, a store of value, or a unit of account. In his opinion, this cryptocurrency is characterized by high volatility and is not suitable for performing the functions of traditional currency.
However, Orr does not question the potential of blockchain technology and the possibilities it brings. He believes that it can be used for the development of innovative solutions in various sectors that are independent of the instability and risks associated with cryptocurrencies.
Regulating cryptocurrencies in New Zealand
Governor Orr admitted that the Reserve Bank of New Zealand (RBNZ) does not have full control over the use of cryptocurrencies in the country. He emphasized that this is a problem that many central banks around the world are facing as they strive to understand and regulate the cryptocurrency sector effectively.
However, despite the lack of full control over cryptocurrencies, Adrian Orr firmly stressed his position regarding their uncertainty as monetary tools. His statements express concerns about the risks associated with cryptocurrencies and underscore the need for caution when using these types of digital assets.