As governments and financial hubs around the world move quickly to explore the role of stablecoins in their economies, China is sticking to a far more cautious approach. Zhou Xiaochuan, the former governor of the People’s Bank of China (PBoC), has made it clear that stablecoins bring more risks than benefits for the country. His remarks come at a time when the United States, Singapore, and Hong Kong are advancing policies and pilot projects to integrate stablecoins into mainstream finance.
Stablecoins Seen as Offering Limited Advantages
Zhou, who served as PBoC governor for over 15 years, believes stablecoins add little value compared with China’s current payment systems. Speaking at a closed-door meeting, he explained that stablecoins provide no meaningful cost or technical advantages.
Zhou Xiaochuan, the former governor of the People’s Bank of China
China’s existing digital payment ecosystem, powered by giants such as Alipay and WeChat Pay, already enables fast and seamless transactions on a massive scale. Zhou noted that stablecoins cannot compete with this level of efficiency. Moreover, he questioned whether the backing of stablecoins, typically tied to assets like the U.S. dollar is truly reliable, pointing to unresolved concerns over liquidity and reserves.
Risks of Speculation and Fraud
Another of Zhou’s main concerns is the speculative use of stablecoins. He warned that these digital assets are increasingly being used to trade other cryptocurrencies and risky financial products. This, he argued, raises the danger of fraud, volatility, and financial instability.
His comments highlight a broader fear that speculative trading could overshadow any potential benefits of stablecoins. If left unchecked, the widespread use of stablecoins for such purposes could, in Zhou’s view, undermine confidence in financial markets and even destabilise parts of the economy.
A Clear Contrast with U.S. Policy
Zhou’s warning stands in sharp contrast to the stance taken in Washington. Only days earlier, U.S. Treasury Secretary Scott Bessent described stablecoins as “the next big tool” for strengthening dollar dominance worldwide. The U.S. government sees stablecoins as a means of improving financial infrastructure, expanding the reach of the dollar, and deepening global demand for U.S. debt.
Zhou, however, dismissed these arguments as misplaced. He believes China’s own digital systems already surpass what stablecoins can offer. With the state actively rolling out the digital yuan, its central bank digital currency (CBDC), China has little need to rely on stablecoin models.
Beijing’s Conservative Approach Continues
China’s overall position on digital assets remains strict. The government banned cryptocurrencies in 2021 and has since pushed the digital yuan as its official path forward. Unlike Hong Kong, which has sought to attract crypto businesses and test stablecoin projects, Beijing has consistently favoured a conservative stance.
The digital yuan has already been piloted across multiple Chinese cities, making China one of the global leaders in CBDC development. Zhou argues that this system provides all the efficiency the country needs, leaving no real space for stablecoins. Instead, he views them as potentially destabilising forces that could threaten both financial stability and consumer protection.
Zhou Xiaochuan’s remarks reinforce China’s long-held scepticism toward private digital currencies. While other regions see stablecoins as tools of innovation and global influence, China remains committed to its state-backed model. The former PBoC governor’s warning underlines that stablecoins are unlikely to play a significant role in the country’s future financial system, especially with the digital yuan already taking shape as Beijing’s chosen path.
