According to a Bloomberg story, Adrian Orr, the governor of the central bank of New Zealand, stated during a parliamentary debate that stablecoins were laughable.
Coins labelled as stable are not. They are only as good as the stablecoin provider’s financial sheet, the source quotes him as stating.
Concerns regarding their balance sheet or the stability of the organisations storing their assets have led to a peg test for a few stablecoins.
Amid worries about its capacity to exchange the stablecoins it had issued for fiat money, TrueUSD (TUSD) was taken off its peg and is currently trading below $1.
When Circle revealed that it had sizable reserves held at the bankrupt Silicon Valley Bank, USDC dropped to about 95 cents on the dollar last year.
Orr is reported as saying that low, stable inflation is ensured by an independent central bank and parliamentary authority supporting the New Zealand dollar and other fiat currencies.
A increasing number of academics and the Federal Reserve are calling for the creation of mechanisms that will guarantee stablecoin stability in the interim.
The CEO of Cantor Fitzgerald, whose company oversees a sizable portion of Tether’s assets, Howard Lutnick, stated in a January Bloomberg TV interview that the stablecoin issuer “has the money.”
Lutnick remarked, “I oversee a lot of their holdings.” “We put in a lot of work, and from what I’ve seen, they have the money they claim to have.”