Stablecoins pegged to the renminbi present systemic risks to China’s financial stability by potentially undermining capital controls and diverting payment flows from established systems; Zhou Xiaochuan argues they add limited value given China’s robust retail payments (Alipay, WeChat Pay, digital renminbi) and could create liquidity and regulatory challenges.
Zhou Xiaochuan warns renminbi-pegged stablecoins risk disrupting financial stability.
Stablecoins may weaken capital controls and duplicate existing payment functions.
Global stablecoin adoption has expanded rapidly, increasing regulatory scrutiny and systemic concern.
Stablecoins pegged to the renminbi pose systemic risks to China’s financial stability; read expert analysis and key takeaways now.
What did Zhou Xiaochuan say about stablecoins pegged to the renminbi?
Stablecoins pegged to the renminbi are unlikely to strengthen China’s payments or financial stability, Zhou Xiaochuan said at a July 2025 seminar. He emphasized that existing retail systems—Alipay, WeChat Pay, and the digital renminbi—already deliver efficient, low-cost payments, and new stablecoins could introduce instability and regulatory complications.
How could renminbi-pegged stablecoins affect China’s financial stability?
Zhou highlighted three transmission channels of concern: (1) disruption to domestic payment flows, (2) pressure on capital controls if foreign demand grows, and (3) concentration risks from large issuers. Global stablecoins such as USDT and USDC illustrate how market dominance can create systemic exposure outside traditional banking oversight.
“Stablecoins pegged to the renminbi are not only unlikely to strengthen China’s financial system but may also trigger instability… The claimed advantages of stablecoins are overly exaggerated… Our retail payment system—Alipay, WeChat Pay, and digital renminbi—already offers efficient and low-cost features, leaving little room for new stablecoins to provide additional value.” – Zhou Xiaochuan, Former Governor, People’s Bank of China (PBOC)
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Why does China view stablecoins with caution?
China’s regulatory approach prioritizes financial stability and capital control. Stablecoins, particularly those with cross-border use, can complicate monetary policy transmission and open channels for outflows. Policymakers view the digital renminbi and established mobile-payment networks as sufficient for domestic needs.
How does this fit into global stablecoin trends?
Globally, stablecoin supply and on-chain usage have expanded, drawing regulatory attention. That trend underlines why Chinese officials stress prudence: cross-border stablecoins can create unregulated corridors for value transfer that challenge oversight and investor protection.
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Key risks include disruption to payment systems, concentration of issuer risk, and potential erosion of capital controls. Regulators worry these factors could create liquidity stress and complicate monetary policy implementation.
Stakeholders should monitor issuer transparency, reserve backing, regulatory compliance, and on-chain flows. Policymakers should prioritize clear rules and supervisory frameworks to mitigate systemic spillovers.
Zhou Xiaochuan’s comments reinforce China’s cautious posture toward renminbi-pegged stablecoins, prioritizing financial stability and control. Policymakers and market participants should emphasize transparency, regulatory compliance, and careful monitoring to prevent systemic risks. COINOTAG will continue coverage as the regulatory and market landscape evolves.