Ex-PBOC Governor Urges Caution on Stablecoin Adoption
- Zhou Xiaochuan critiques stablecoin adoption, emphasizing financial system risks.
- Stablecoins pose speculation and stability threats.
- China’s digital yuan remains the priority over new stablecoins.
Former PBOC Governor Zhou Xiaochuan argues against stablecoin adoption during a CF40 session in July 2025, citing potential financial instability risks in China’s monetary system.
Zhou’s critique highlights potential systemic risks from stablecoins, impacting global and domestic financial markets without immediate noted reactions.
Analysis of Stablecoin Risks
Zhou Xiaochuan, former head of China’s central bank, has criticized the rapid growth of stablecoins. His comments were made during a closed-door session mid-July, emphasizing the potential risks to financial stability associated with asset speculation.
Zhou pointed out the risk of these digital assets leading to financial instability in China’s robust monetary system, remarks delivered at the China Finance 40 Forum. He stated:
We need to be vigilant against the risk of stablecoins being excessively used for asset speculation, as misdirection could trigger fraud and instability in the financial system.
Adoption Concerns and Regulation
Zhou’s observation comes amid a growing interest in stablecoin regulation worldwide. His critique underscores China’s stance against potential fraud and instability within its financial markets. Zhou’s call for vigilance reflects a broader hesitation towards new digital currencies.
The fears are compounded by the global stablecoin market doubling its supply, which Zhou claims could expand further. This trend raises concerns of currency over-issuance, and Shen warned of leverage effects, influencing China’s monetary strategy.
The Digital Yuan and Existing Systems
Zhou’s opinion mirrors historical crackdowns on digital currencies in China. In 2021, the nation banned crypto trading, strengthening capital controls and monetary governance as part of its financial policy. Observers anticipate comparable outcomes with the stablecoin discourse.
The discussion implicates prominent stablecoins like USDT and USDC, though China’s digital yuan is seen as a secure alternative. Zhou argues existing payment systems already possess high efficiency and affordability, reducing the incentive for stablecoin adoption. China’s financial framework remains a central focus.
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