Ex-PBOC Chief Rejects Stablecoins, Citing Risks to China's Stability

- Zhou Xiaochuan warns stablecoins could destabilize China's financial system. - Beijing’s restrictive approach to digital assets aligns with Zhou’s cautious stance. On August 27, 2025, the China Finance 40 Forum (CF40) reported that Zhou Xiaochuan, the former chief of the People’s Bank of China (PBOC), urged against adopting stablecoins, citing potential risks to financial stability. His strong stance reflects Beijing’s cautious policies on digital assets, which include recent regulatory moves to curb stablecoin promotions. Speaking during a closed-door session on July 15, Zhou expressed skepticism about the value stablecoins could add to China’s advanced financial infrastructure. He argued that the country’s existing systems—including the digital yuan, sophisticated clearing systems, and efficient third-party payment platforms—already operate with high efficiency and low costs. Therefore, Zhou believes these systems leave little room for stablecoins to offer significant improvements. Zhou emphasized that stablecoins carry inherent risks, particularly in speculative trading environments. He warned that leveraged trading and a susceptibility to fraud could amplify systemic instability. In addition, Zhou noted that even countries with robust regulatory frameworks, such as the United States, Hong Kong, and Singapore, struggle to fully oversee stablecoin activity. He explained that this creates regulatory gaps that can lead to market manipulation and increased vulnerabilities. His remarks align with China’s conservative approach to financial innovation, as the nation prioritizes regulatory control and economic stability. Chinese regulators recently instructed financial institutions and brokers to stop promoting stablecoins, an action that reflects a broader commitment to maintaining order in the financial system. Zhou reinforced this stance, arguing that stablecoins could undermine the nation’s goals for security, efficiency, and regulatory control within the payment ecosystem. Meanwhile, as of August 27, the stablecoin market continued to demonstrate its global scale. Tether (USDT) was trading at $1.00, with a -0.007% change in 24-hour volume, and DAI held steady at $1.00, with a 0.004% 24-hour change. PayPal USD (PYUSD) stood at $0.999, showing a -0.041% change, while TrueUSD (TUSD) was priced at $0.998, with a 0.02% 24-hour volume change. This data underscores the significant role stablecoins play in the global financial system, a point that reinforces Zhou’s warnings about their broader implications.