Ex-PBOC governor warns on stablecoin speculation, questions case for yuan peg
China’s former central bank governor has warned that speculation in stablecoins could threaten financial stability, Bloomberg reported, citing a post from the Beijing-based think tank CF40 Research. His remarks run counter to calls from some economists and industry figures for a yuan-backed stablecoin as the U.S. advances its digital-asset policy agenda.
Zhou Xiaochuan, who led the People’s Bank of China (PBOC) from 2002 to 2018, delivered the comments at a closed-door meeting in mid-July. He argued that China’s payment rails—spanning third-party platforms, the central bank digital currency (CBDC), digital wallets, and clearing infrastructure—are already highly efficient, leaving little scope for stablecoins to deliver meaningful cost savings. He also rejected the premise that conventional cross-border payments come at steep costs.
Zhou identified price manipulation driven by speculative trading as the chief risk to financial and asset markets, adding that current safeguards in the U.S., Hong Kong, and Singapore remain inadequate.
Onshore controls push yuan stablecoins offshore
Any debate over a yuan-linked token must also contend with China’s currency structure. The onshore yuan (CNY) is subject to strict capital controls and limited cross-border convertibility, while the offshore yuan (CNH) trades more freely. As a result, any prospective yuan stablecoin would likely reference the CNH; pegging directly to the CNY would conflict with Beijing’s capital rules.
An earlier Reuters report has indicated that Beijing is weighing whether to authorize a yuan-pegged stablecoin to promote international use of the currency. Analysts caution that such a token would almost certainly be confined to offshore markets, even if regulators proceed.
U.S. sets federal guardrails for stablecoins
Meanwhile, policy moves in the U.S. are gathering pace. In July, President Donald Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act into law, creating a federal framework for stablecoins. A White House fact sheet says the law requires issuers to maintain 100% reserves in liquid assets such as U.S. dollars or short-term Treasuries and to publish monthly disclosures on reserve composition. The administration has argued that dollar-backed stablecoins could bolster demand for Treasuries and reinforce the dollar’s reserve-currency role.
Hong Kong has emerged as comparatively receptive to digital assets. The special administrative region’s Stablecoins Ordinance entered into force on Aug. 1, establishing a licensing regime to oversee Hong Kong dollar–backed stablecoins. Earlier this month, CMB International Securities, a subsidiary of China Merchants Bank, became the first Chinese bank-affiliated institution to offer trading in Bitcoin, Ethereum, and Tether (USDT).
Industry voices are also pressing the case for stablecoins. At the WebX conference in Tokyo on Aug. 25, Binance co-founder Changpeng Zhao (CZ) argued that CBDCs are becoming obsolete, while stablecoins—typically backed by real assets—enable wider transactions and are gaining market traction. He said CBDCs remain rarely implemented due to limited demand and suggested China appears more open to stablecoins after years of tighter oversight, pointing to Hong Kong’s efforts to build an ecosystem.
Potential PBOC stimulus may lift crypto
China remains a consequential force in global crypto markets. A recent report suggested that potential PBOC stimulus could fuel an altcoin rally. With China accounting for 19.5% of global GDP, shifts in its monetary stance are seen as important drivers of worldwide liquidity. Following July data showing a 0.1% month-on-month decline in retail sales, a 0.4% rise in industrial production, and an uptick in unemployment to 5.2%, analysts expect measures to support growth. Any additional liquidity could flow into risk assets, including cryptocurrencies, potentially pushing digital tokens toward new highs.
