The post Former Chinese Central Bank Governor Sounds Alarm on Stablecoins appeared on BitcoinEthereumNews.com. Fintech Zhou Xiaochuan, the former head of China’s central bank, has issued a sobering assessment of stablecoins and digital payment networks, cautioning that their rapid rise may bring new vulnerabilities rather than solutions. In a lengthy article, Zhou argued that the push to decentralize every corner of finance has been overstated. According to him, traditional account-based systems remain efficient and secure, while many stablecoin models still lack the regulatory discipline to handle large-scale adoption. Concerns Over Market Stability Zhou emphasized that stablecoin issuers often act with the mentality of central banks “printing money,” minting tokens in search of wider adoption without the same grasp of monetary policy. This unchecked issuance, combined with high leverage in the market, could create a multiplier effect during times of stress, leading to liquidity shocks. He also warned that price manipulation remains widespread in crypto markets where stablecoins are heavily used, leaving inexperienced investors particularly exposed. With stablecoins now intertwined with real-world asset (RWA) trading, Zhou cautioned that transparency gaps could draw in younger, unprotected investors. Weak Usage and Regulatory Challenges Beyond speculation, Zhou questioned whether many stablecoins even meet real economic demand. He suggested that without strong use cases, tokens risk becoming redundant despite regulatory licenses. He further reminded that today’s conventional payment systems already offer extremely low costs, making it difficult for stablecoins to compete once compliance requirements like KYC and AML are applied. Inadequate Oversight While measures such as the U.S. GENIUS Act and Hong Kong’s stablecoin framework attempt to tighten oversight, Zhou believes current rules fall short. Critical issues like reserve management — who holds the assets and where — remain unresolved, leaving systemic risks in the event of a crisis. Bigger Picture Zhou’s intervention highlights a growing divide between the promise of stablecoins as global payment tools and the reality… The post Former Chinese Central Bank Governor Sounds Alarm on Stablecoins appeared on BitcoinEthereumNews.com. Fintech Zhou Xiaochuan, the former head of China’s central bank, has issued a sobering assessment of stablecoins and digital payment networks, cautioning that their rapid rise may bring new vulnerabilities rather than solutions. In a lengthy article, Zhou argued that the push to decentralize every corner of finance has been overstated. According to him, traditional account-based systems remain efficient and secure, while many stablecoin models still lack the regulatory discipline to handle large-scale adoption. Concerns Over Market Stability Zhou emphasized that stablecoin issuers often act with the mentality of central banks “printing money,” minting tokens in search of wider adoption without the same grasp of monetary policy. This unchecked issuance, combined with high leverage in the market, could create a multiplier effect during times of stress, leading to liquidity shocks. He also warned that price manipulation remains widespread in crypto markets where stablecoins are heavily used, leaving inexperienced investors particularly exposed. With stablecoins now intertwined with real-world asset (RWA) trading, Zhou cautioned that transparency gaps could draw in younger, unprotected investors. Weak Usage and Regulatory Challenges Beyond speculation, Zhou questioned whether many stablecoins even meet real economic demand. He suggested that without strong use cases, tokens risk becoming redundant despite regulatory licenses. He further reminded that today’s conventional payment systems already offer extremely low costs, making it difficult for stablecoins to compete once compliance requirements like KYC and AML are applied. Inadequate Oversight While measures such as the U.S. GENIUS Act and Hong Kong’s stablecoin framework attempt to tighten oversight, Zhou believes current rules fall short. Critical issues like reserve management — who holds the assets and where — remain unresolved, leaving systemic risks in the event of a crisis. Bigger Picture Zhou’s intervention highlights a growing divide between the promise of stablecoins as global payment tools and the reality…