Former Central Bank Governor Zhou Xiaochuan: Stablecoins face risks of over-issuance and high leverage, and the argument for full tokenization replacing account payments is insufficient.

[Former Central Bank Governor Zhou Xiaochuan: The existence of over-issuance and high leverage risks in stablecoins, the argument for comprehensive tokenization replacing account payments is insufficient] Former Governor of the People's Bank of China Zhou Xiaochuan published an article "A Multidimensional Perspective on Stablecoins," which deeply analyzes the current development status and potential risks of stablecoins. Zhou Xiaochuan pointed out that the Central Bank has two main concerns about stablecoins: first is the risk of "excessive issuance of currency", that is, the issuer over-issues stablecoins in the absence of 100% real reserves; second is the high leverage amplification effect, where the operation of stablecoins after issuance may generate a multiplier effect of currency derivation. He believes that the current centralized account management system still has good applicability, and the view of fully replacing account payment systems with tokenization lacks sufficient basis. The existing regulatory frameworks, such as the U.S. "Genius Act", relevant regulations in Hong Kong, and regulatory provisions in Singapore, have not yet reached a satisfactory level in addressing these issues. Zhou Xiaochuan stated that although the market generally believes that stablecoins will reshape the payment system, objective assessments show that the cost optimization space of the current payment system, especially in the retail payment sector, is already very limited. He warned against the overuse of stablecoins for asset speculation, as this deviation may lead to fraudulent activities and instability in the financial system. The article also mentions that obtaining a license and paying reserve funds do not equate to successfully issuing a stablecoin. Without sufficient application scenarios, stablecoins may struggle to achieve effective circulation, potentially leading to a situation of "licensed but without coins." Whether stablecoins serve as a temporary payment tool during transactions or as a means of storing value during specific periods will directly impact their market retention.