In New Zealand, where inflation is 3.9 percent and the central bank is still imposing strict regulations, the stable coin issue emerged. Stablecoins are unstable, according to a speech made by the nation’s central bank head.

“They’re only as good as the balance sheet of the person offering that stablecoin.”

Central bank head Adrian Orr responded to questioning from members of parliament at a parliamentary committee, claiming that  they’re only as good as the balance sheet of the person offering that stablecoin.

“Stablecoins cannot replace fiat currencies. Stablecoins are one of the biggest contradictions in the world right now. Because they are not eternal. The company’s balance sheet is the only factor that determines their stability. Fiat money, on the other hand, is an asset issued by the government and supported by the state; “the best money is fiat money.”

Orr also stated that cryptocurrencies other than stablecoins are not safe and carry great risks.

As you may remember, during last year’s banking crisis in the United States, several stable coins, especially USDC and USDT, lost their value to 1 dollar. As Silicon Valley Bank continued to own over $3 billion in shares of the Circle company, as the corporation that created USDC, these issues continued for an even longer amount of time for USDC. SVB and Signature Bank were the two largest banks affected by the crisis.

As Tether’s USDT was not based in the USA, it was able to cope with the crisis well.