Ex-PBOC Chief Zhou Xiaochuan Warns Against China’s Stablecoin Push

TLDR

• Former PBOC Governor Zhou Xiaochuan has warned that China’s stablecoin could introduce significant financial risks.
• Zhou argued that China’s existing payment systems are already efficient, leaving little room for stablecoin benefits.
• He emphasized that stablecoins could become speculative tools vulnerable to fraud and market manipulation.
• Zhou cautioned that large-scale adoption of stablecoins could destabilize China’s financial markets and undermine capital controls.
• Despite Zhou’s concerns, the global supply of stablecoins has surged, with projections suggesting a market value of $1.8 trillion by 2028.

The debate over China’s stablecoin has sparked division among policymakers, with former People’s Bank of China (PBoC) Governor Zhou Xiaochuan expressing strong reservations. Zhou warned that the introduction of stablecoins could introduce risks and instability into China’s financial system. His comments, made at a private meeting in Beijing, cast doubt on the advantages claimed by advocates of yuan-backed stablecoins.

Zhou’s Concerns on Financial Stability

Zhou Xiaochuan raised concerns about the potential risks stablecoins could pose to China’s financial system. According to Zhou, claims about the benefits of stablecoins are overstated. He highlighted that China’s existing retail payment systems, such as Alipay, WeChat Pay, and the digital yuan, already provide efficient and low-cost services. Zhou further explained that stablecoins could introduce volatility and become speculative instruments vulnerable to fraud.

In his remarks, Zhou argued that adopting stablecoins would undermine China’s control over capital flows. “The use of stablecoins on a large scale would destabilize the market,” he warned. He pointed out that stablecoins, especially if unregulated, could easily become tools for manipulation, threatening the stability of China’s financial system.

Global Stablecoin Surge and Market Growth

Despite Zhou’s reservations, the global stablecoin market has surged. The total supply of stablecoins reached approximately $270 billion by mid-2025, up from $130 billion earlier in the year. This increase highlights a growing global interest in these blockchain-based assets. As the supply expands, projections estimate the market could reach $1.8 trillion by 2028.

The growth of stablecoins signals their rising importance in the global economy. Supporters argue that stablecoins could boost the efficiency of payment systems, particularly in the U.S. market. They also emphasize their growing integration with decentralized finance (DeFi) platforms and cross-border transactions.

China Stablecoin Debate Continues Amid Global Growth

China’s stablecoin discussion is intensifying, as the government considers its potential role in the global financial system. While Zhou’s warnings reflect resistance within China, the stablecoin market continues to evolve rapidly.

If the current growth trajectory continues, stablecoins could become one of the largest categories in the cryptocurrency space by 2028. This development, however, raises questions about how China will navigate the balance between innovation and financial control.

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