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The Central Bank’s China’s Governor has expected that a new global currency regulations are being created after decades of dominance, with the Renminbi competing in a “multipolar international currency system”.
Pan Gongsheng said in the China’s flagship finance forum in Shanghai and said that the US dollar had “dominated its dominance” after the Second World War and “so far retained its status”. He warned of “excessive trust” in a single currency.
“In the future, the global monetary system could continue to develop into a pattern in which some sovereign currencies coexist, compete with each other and check and compensate for each other,” he said in a growing role for the Renminbi.
According to Pan, the most important developments in the international currency system have been the introduction of the euro and the Renminbi rise since the global financial crisis in 2008 in the past two decades.
The Renminbi was the second largest trade financing currency in the world and the third largest payment currency in the world.
His comments came one day after Christine Lagarde, President of the European Central Bank, said that the “dominant role of the dollar” was “no longer safe” and created an opening for the euro to take over “global meaning”.
Pan’s comments also indicate a new urgency in China’s long -standing advance after a “multipolar” towel. currency System such as China with the USA about the trade and Donald Trump’s imposition of higher tariffs.
Beijing and Washington have entered a fragile ceasefire that reduces the tariff level from an escalation in April, but the tensions remain under a new US government that shakes international trade.
“When geopolitical conflicts, national security interests or even wars occur, the international dominant currency is slightly exploited and armed,” said Pan.
Pan and Lagarde met in Beijing last week to sign a memorandum of understanding for cooperation in central banking, which contains a framework for the regular dialogue.
Pan also noticed discussions about the stronger use of SDRS – a currency basket defined by the IMF – as a potential alternative that could help “to overcome the inherent problems of a single sovereign currency as a dominant international currency”.
His comments came together with several announcements on Wednesday, which CHINAS moves to a Renminbi-centered currency system in connection with an international operating center for the digital Renminbi in Shanghai.
Six foreign institutions, including the Singapore Bank OCBC and Kyrgyzstan’s third largest lender Eldik Bank, also said that they would join China’s cross-border interbank payment system (CIPS), an alternative to the Swift Global payment system.
The authorities in Hong Kong and Shanghai also signed an “action plan” on Wednesday to strengthen financial ties, including the administration and allocation of Renminbi-United assets.
Zhu Hexin, deputy governor of the PBOC and head of the state administration of foreign exchange, said Beijing would expand a program with which local investors can buy assets outside China. According to ZHU, the expansion of the qualified domestic institutional investor system would “meet the growing onshore needs of offshore investments”.