The role of cryptocurrencies in modern finance has long been a subject of debate, especially when it comes to their practical application in real-world economic systems. At the 13th Lujiazui Forum on June 11, Zhou Xiaochuan—Deputy Chairman of the Boao Forum for Asia, Chief Chinese Representative, and President of the China Finance Society—shared valuable insights into how digital currencies can or cannot serve the real economy. His remarks offer a balanced, forward-looking perspective on financial innovation, particularly in the context of fintech and digital assets.
Zhou emphasized a core principle guiding China’s financial policy: the importance of financial services supporting the real economy. This concept underscores that financial markets and services should not operate in isolation but must remain closely tied to tangible economic activities such as manufacturing, trade, and consumer spending.
👉 Discover how fintech innovations are reshaping global payment systems today.
Can Cryptocurrencies Serve the Real Economy?
Zhou acknowledged that, in theory, cryptocurrencies could become a useful tool for serving the real economy—if they successfully function within the payment ecosystem. The original design philosophy behind many crypto assets was to enable fast, secure, and decentralized transactions, potentially improving efficiency in retail and cross-border payments.
However, he pointed out several early-stage limitations:
- Low transaction throughput (TPS): Many blockchain networks struggle to process a high volume of transactions per second, making them less viable for widespread daily use.
- High resource consumption: Cryptocurrency networks often require significant computational power and bandwidth, raising sustainability concerns.
- Controversial features: The emphasis on decentralization and resistance to regulation has sparked debates about accountability, stability, and systemic risk.
Despite these challenges, Zhou stressed that it's too early to write off the entire space. "We need to wait and see whether these technical and operational issues can be resolved over time," he said.
From Payments to Speculative Assets: A Shift in Focus
One of Zhou’s most critical observations was about intent. He argued that the trajectory of many cryptocurrencies has shifted away from utility due to the motivations of those involved.
"When participants or developers are overly eager to make quick profits, they naturally lean toward trading mechanisms to recoup investments—or even generate massive returns," Zhou explained. This shift, he noted, transforms what could have been a payment-focused innovation into a digital asset or speculative instrument.
Once a cryptocurrency becomes primarily associated with speculation—price swings, trading volumes, and investment hype—it loses credibility as a stable medium of exchange. As a result, some cryptocurrencies may have missed their window to re-enter the payment domain.
"From today’s perspective, certain cryptocurrencies may no longer be suitable for returning to the payment space. They’ve lost the opportunity and public trust."
This sentiment highlights a key lesson: technological potential alone isn’t enough. Market perception, regulatory acceptance, and real-world usability all play crucial roles in determining whether a digital asset can integrate into mainstream finance.
China’s Stance: Innovation Must Serve Real Economic Needs
China takes a distinctive approach by prioritizing whether financial innovations deliver tangible value to the real economy. According to Zhou, this focus is not universally shared across nations.
"Many people assume that all countries emphasize financial services supporting the real economy—but that’s not true," he said. "In fact, numerous economies don’t stress this connection at all."
In China’s view:
- Innovations that enhance productivity, reduce transaction costs, or improve financial inclusion are encouraged.
- Projects driven mainly by speculation or regulatory arbitrage receive less support.
- Pilot programs and research funding are directed toward solutions with clear societal and economic benefits.
This framework helps explain China’s cautious yet proactive stance on fintech—supportive of blockchain technology and central bank digital currency (CBDC), while maintaining strict controls over private cryptocurrencies.
👉 Explore how next-generation blockchain platforms are addressing scalability and sustainability.
Core Keywords and Strategic Implications
Based on Zhou Xiaochuan’s remarks, several core keywords emerge as central to understanding the future of digital finance:
- Cryptocurrency
- Fintech
- Real economy
- Payment systems
- Blockchain innovation
- Digital assets
- Financial regulation
- Transaction efficiency (TPS)
These terms reflect both the opportunities and challenges in aligning decentralized technologies with national economic goals. For developers and policymakers alike, the takeaway is clear: long-term success depends not just on technical prowess, but on alignment with broader socioeconomic needs.
Frequently Asked Questions (FAQ)
Q: Can any cryptocurrency still succeed as a payment method?
A: Yes, but only if it addresses scalability, stability, and regulatory compliance. Projects focusing on utility over speculation have a better chance.
Q: Why does China emphasize serving the real economy?
A: To prevent financial bubbles and ensure that capital flows into productive sectors rather than speculative ventures that don’t generate real value.
Q: Is blockchain technology still supported despite crypto skepticism?
A: Absolutely. Blockchain is viewed separately from cryptocurrencies. Its applications in supply chain, identity verification, and CBDCs are actively explored.
Q: What does TPS mean, and why is it important?
A: TPS stands for Transactions Per Second. High TPS is essential for any payment system aiming to handle large volumes—like credit cards or mobile wallets.
Q: Has China banned all fintech innovation?
A: No. While private cryptocurrencies face restrictions, China supports regulated fintech advancements, especially through its digital yuan (e-CNY) program.
Q: Could decentralized finance (DeFi) serve the real economy?
A: Potentially—but only if risks like volatility, lack of consumer protection, and regulatory gaps are addressed.
👉 Learn how emerging fintech solutions are bridging traditional finance with digital innovation.
Final Thoughts
Zhou Xiaochuan’s commentary offers a nuanced view of cryptocurrency’s evolving role—one that balances openness to innovation with pragmatic caution. While some digital assets may have strayed too far into speculation to return as payment tools, the underlying technology still holds promise.
The key lies in intention and application. When fintech development is guided by the goal of enhancing real economic activity—rather than chasing short-term gains—it gains legitimacy and long-term viability.
As global financial systems continue to digitize, Zhou’s message serves as a timely reminder: technology should serve people and economies, not the other way around.