The role of cryptocurrencies in the global financial system has long been a subject of debate among policymakers, economists, and technologists. One of the most insightful perspectives comes from Zhou Xiaochuan, former People’s Bank of China governor and current Vice Chairman of the Boao Forum for Asia. Speaking at the 13th Lujiazui Forum, Zhou offered a nuanced view on whether digital currencies can truly serve the real economy—a principle central to China’s financial philosophy.
Zhou emphasized that financial services must be deeply intertwined with real economic activity. This guiding principle shapes how innovations like fintech and cryptocurrency are evaluated—not by their technological novelty alone, but by their tangible impact on commerce, trade, and everyday transactions.
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Can Cryptocurrencies Serve the Real Economy?
At the heart of Zhou’s argument is a fundamental question: Can cryptocurrencies evolve from speculative assets into practical tools for economic exchange? His answer is cautiously optimistic.
He acknowledged that from a design and conceptual standpoint, certain cryptocurrencies were originally intended to function as efficient payment systems. In theory, they could reduce transaction costs, increase speed, and expand financial inclusion—especially in underbanked regions.
“Cryptocurrencies, in terms of their original principles and design ideas, still have the potential to become useful tools for serving the real economy—if they can actually play a role in the payment domain.”
However, Zhou pointed out several early-stage limitations that have hindered widespread adoption:
- Low transaction throughput (TPS): Many early blockchain networks struggle to process high volumes of transactions per second, making them impractical for mass retail use.
- High resource consumption: Proof-of-work mechanisms, in particular, demand significant computational power and energy.
- Decentralization vs. regulation: The ideological push for complete decentralization and resistance to oversight creates tension with financial stability and consumer protection goals.
These technical and philosophical challenges have slowed integration into mainstream payment ecosystems.
Lost Opportunities: When Speculation Overrides Utility
One of Zhou’s most striking observations was that some cryptocurrencies have missed their window to become viable payment solutions.
“From today’s perspective, some cryptocurrencies may no longer be suitable or acceptable for returning to the payment space. They’ve lost that opportunity.”
Why? Because their development trajectories shifted away from utility toward speculation. When creators and investors prioritize quick profits over functional deployment, digital assets morph into trading instruments rather than mediums of exchange.
This shift has real consequences:
- Market volatility discourages merchants from accepting crypto as payment.
- Regulatory scrutiny increases due to concerns over money laundering and investor protection.
- Public trust erodes when price swings dominate headlines instead of adoption metrics.
As a result, many so-called “payment coins” now function more like digital commodities than currency substitutes.
China’s Unique Stance: Finance Must Serve Production
Zhou highlighted a crucial distinction in global financial ideology: while China strongly emphasizes aligning finance with the real economy, this is not a universal priority.
In many Western economies, financial markets often operate with considerable autonomy—sometimes even driving economic trends rather than responding to them. But in China’s model, the purpose of finance is to facilitate production, support small businesses, and enable infrastructure development.
This philosophical difference influences how innovations are assessed:
- Projects that enhance supply chain financing or cross-border trade efficiency receive more attention.
- Pilot programs for central bank digital currencies (CBDCs) focus on usability, stability, and integration with existing systems.
- Speculative ventures lacking clear societal benefit face tighter scrutiny.
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Evaluating Innovation: A Framework Based on Utility
Zhou outlined a clear framework for assessing fintech innovations:
“When it comes to cryptocurrency innovation, the Chinese approach focuses heavily on one key question: How does this serve the real economy?”
If an innovation demonstrates strong utility—such as faster settlements, lower remittance costs, or improved access to credit—it earns greater support for research, development, and pilot testing.
Conversely, projects driven primarily by hype or trading volume are likely to receive less institutional backing.
This pragmatic evaluation method helps avoid technological fetishism—the tendency to celebrate new tools simply because they’re novel—while ensuring resources are directed toward meaningful progress.
FAQ: Understanding Cryptocurrency's Economic Role
Q: Can any cryptocurrency realistically replace traditional payment methods?
A: Technically, yes—but only if it solves scalability, stability, and regulatory compliance issues. Stablecoins and CBDCs are currently better positioned than volatile decentralized coins.
Q: Why does China emphasize serving the real economy so strongly?
A: Because sustainable growth depends on productive investment, not asset bubbles. Financial systems should support manufacturing, services, and innovation—not just trading.
Q: Are all cryptocurrencies considered speculative by Chinese authorities?
A: Not necessarily. While private cryptocurrencies face restrictions, blockchain technology itself is supported—especially when applied to supply chains, trade finance, or digital yuan development.
Q: What makes a cryptocurrency “useful” for the real economy?
A: Usefulness means enabling faster payments, reducing fraud, lowering costs for small businesses, or expanding access to financial services in remote areas.
Q: Is there still room for crypto innovation under strict regulatory frameworks?
A: Absolutely. Regulation can guide innovation toward responsible use cases. Many breakthroughs occur within compliant environments—not despite them.
Q: Could decentralized finance (DeFi) ever serve the real economy?
A: Potentially—if it integrates with regulated systems, ensures transparency, and avoids systemic risks. Pure decentralization without accountability poses challenges.
The Path Forward: From Hype to Functionality
Zhou Xiaochuan’s remarks offer a sobering yet constructive vision for the future of digital finance. The era of treating cryptocurrencies solely as get-rich-quick schemes may be giving way to a more mature phase—one where value is measured not in price charts, but in real-world impact.
For developers and entrepreneurs, this means focusing on:
- Building scalable, energy-efficient networks.
- Designing user-friendly interfaces for non-technical users.
- Collaborating with regulators to ensure compliance without sacrificing innovation.
The goal isn’t just to disrupt—it’s to deliver.
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Conclusion: Relevance Over Revolution
Zhou Xiaochuan doesn’t dismiss cryptocurrency outright. Instead, he challenges its community to grow up—to move beyond ideological battles and prove its worth where it matters most: in factories, farms, shops, and households.
The core keywords shaping this discussion—cryptocurrency, real economy, fintech, payment systems, blockchain innovation, financial regulation, digital currency, and economic utility—reflect a shift from speculation to substance.
As global financial systems evolve, the winners won’t necessarily be the most decentralized or the most anonymous—but those that best serve human needs.