China's M2 skyrocketed by 141 trillion RMB in six years! Former Bank of China deputy governor blasts: Bitcoin's fantasy of becoming currency is "destined to fail"

People’s Bank of China data shows that by the end of 2025, China’s broad money supply (M2) reached 340.29 trillion yuan, a surge of 141.64 trillion yuan compared to the end of 2019, with an average annual increase of over 23.6 trillion yuan. Former Vice President of the Bank of China and SWIFT’s first China mainland director Wang Yongli authored an analysis on the sources of this massive money supply, bluntly stating: “Cryptocurrencies like Bitcoin trying to anchor currency is a step backward and doomed to fail.” This article is based on Wang Yongli’s piece “Where Does the Huge Money Supply Increase Come From,” translated and reported by Dongqu.

(Previous context: Bitcoin hits a new all-time high, what is the “currency devaluation trade” that is hotly discussed in the market?)

(Additional background: Interpretation of the global liquidity cycle: Where are we now? Summary of 12 core indicators)

Table of Contents

• Where does 141 trillion come from? The three main drivers revealed
• Direct critique of Bitcoin: “Re-anchoring currency is a step backward and doomed to fail”
• Another perspective: Six years, 141 trillion in the “currency devaluation trade”

How much has China’s “money printing machine” actually printed? According to the People’s Bank of China’s “Financial Statistics Report,” by the end of 2025, China’s M2 stood at 340.29 trillion yuan (about 47 trillion USD), an increase of 141.64 trillion yuan over the 198.65 trillion yuan at the end of 2019—an average annual increase of over 23.6 trillion yuan, with more than 28 trillion yuan added in 2022 alone.

Recently, Wang Yongli, former Vice President of the Bank of China and PhD in Economics, published an in-depth analysis of the sources of this huge monetary increase, while also sharply criticizing the idea of Bitcoin and other cryptocurrencies “anchoring” currency.

Where does 141 trillion come from? The three main drivers revealed

Wang Yongli pointed out that during the same period, the central bank’s balance sheet only expanded by 11.05 trillion yuan (from 37.11 trillion to 48.16 trillion), accounting for only 7.8% of the total money supply growth. So, where did the remaining massive increase come from?

Driver One: Credit expansion (largest share)

By the end of 2025, RMB loans reached 271.91 trillion yuan, an increase of 118.80 trillion yuan from the end of 2019’s 153.11 trillion yuan, making it the primary driver of M2 explosion. Commercial banks create deposits directly through credit issuance, which is the core money creation mechanism in the modern credit money system.

Driver Two: Monetization of government debt

Depository institutions and the central bank’s holdings of government bonds increased from 30.53 trillion to 74.35 trillion, an increase of 43.82 trillion yuan. However, deposits held by the government at the central bank also increased by 1.76 trillion yuan, partially offsetting the increase.

Driver Three: Financial asset purchases and foreign exchange flows

Social entities purchase financial assets such as stocks, insurance, and wealth management products, estimated to have increased by about 26 trillion yuan. Additionally, from 2020 to 2025, banks’ net foreign exchange settlement and sales amounted to 3.57 trillion yuan of net RMB injection, but the central bank’s foreign exchange reserves remained relatively stable, limiting their impact on base money supply.

Direct critique of Bitcoin: “Re-anchoring currency is a step backward and doomed to fail”

It is noteworthy that Wang Yongli, when discussing the nature of modern credit money, directly criticized Bitcoin. He emphasized that modern currency has completely moved away from the gold standard and is no longer linked to any tangible tradable wealth, but instead maintains a “general anchoring” of the total currency volume to the total value of tradable wealth.

Wang Yongli bluntly states:

“Returning to the gold standard, or re-anchoring currency with assets like cryptocurrencies such as Bitcoin, rare earths, energy, etc., is a misunderstanding of the essence and development law of currency. It is a step backward, not forward, and doomed to fail.”

He further pointed out that under today’s governance structures based on sovereignty independence, creating a supra-sovereign global currency is also “detached from reality and very unlikely to succeed.”

Another perspective: Six years, 141 trillion in the “currency devaluation trade”

However, for crypto market participants, Wang Yongli’s data actually confirms another argument—that the global fiat currency system is accelerating its devaluation.

China’s M2 expanded by 71.3% over six years, with an average annual growth rate of about 9.4%. At this rate, the purchasing power of the yuan is visibly being eroded. This is why the “debasement trade” has become a popular term in recent years, with Bitcoin and gold increasingly viewed by investors as tools to hedge against fiat currency erosion.

Wang Yongli believes that the credit money system is “progressive,” while Bitcoin’s anchoring theory is “a step backward”; however, Bitcoin supporters argue that because central banks can infinitely expand credit, a fixed supply hard asset is needed as a store of value.

The debate over “what makes a good currency” is unlikely to reach a conclusion in the short term.