Professor ZHANG Xiaoyan: Financial Illiteracy Guides China’s Caution on Digital Assets

Time: 2024-01-17 16:23 Print

(Munich, Germany) — China has taken a prudent approach to digital assets regulation due to the limited financial literacy among its population and significant risks these complex products could introduce to the market, Tsinghua PBCSF professor Zhang Xiaoyan told an audience at a conference in Munich Saturday.

China’s regulators are cautious about digital assets because they are worried that retail investors will take on excessive leverage and risk once they gain access to the novel products, said Zhang during a panel co-curated by Caixin and the Digital-Life-Design (DLD) conference.

People in the U.S. and Europe sometimes don’t realize that, despite China’s headway in fintech, it is still a developing country, where some of its large population may not know how to properly manage their wealth, she said.

China was once one of the world’s largest cryptocurrency markets, but the government outlawed all transactions using private cryptocurrencies in 2021. It did so because it saw crypto as a threat to economic stability and a means to fund criminal activity.

Besides digital assets, the panel discussed artificial intelligence (AI) as well. Chinese regulators are taking a cautious approach to the use of AI in finance, as the new technology may lead to risks that people aren’t aware of, Zhang said.

Meanwhile, China’s regulators are supporting AI development, which improves productivity and benefits the people, Zhang said, noting that the government has allowed some large language models to become accessible for the public.

DLD (Digital – Life – Design) was founded in 2005 as an intimate gathering of friends, and developed into Europe’s leading innovation conference for visionaries from around the globe. It takes pride in connecting the unexpected, presenting insights from business and politics, science and art. It aims to spark conversations that cross boundaries and bring participants together in a common search for answers to the most challenging questions that arise through digital change.

The annual conference takes place in Munich each January, shortly before the World Economic in Davos. It is internationally renowned for attracting the best and the brightest in the world of digital.

Edited from Caixin Global