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The governor of China’s central bank expects a new global currency order to emerge after decades of control of the US dollar, and says the yuan is competing in the “multipolar international currency system.”
Speaking at China’s flagship finance forum in Shanghai, Pan Gongshen said the US dollar “established control” after World War II, and “has maintained its position until now.” He warned of “over-trust” in a single currency.
“In the future, the global financial system could continue to evolve towards a pattern in which several sovereign currencies coexist, compete with each other, compete with each other and balanced,” he said.
Pan said that the important developments in the international monetary system over the past 20 years have been the introduction of the euro and the rise of the yuan since the global financial crisis of 2008.
Renminbi is the second largest trade financial currency in the world and the third largest payment currency, he noted.
His comments stated that European Central Bank President Christine Lagarde “is no longer certain” the “dollar’s dominant role” and that the euro has created an opening for it to be “world-famous.”
Pan’s comments also show new urgency for China to push its “multipolar” monetary system for years as China clashes with the US over trade and the imposition of higher tariffs on Donald Trump.
Beijing and Washington are entering a fragile ceasefire that reduces tariff levels since the April escalation, but tensions continue to rise under the new US administration that has shook international trade.
“When geopolitical conflicts, national security interests, and even war arise, the dominant international currency is easily instrumented and weaponized,” Pan said.
Pan and Lagarde met in Beijing last week and signed a memorandum of understanding on central bank cooperation, including a framework for regular dialogue.
Pan also noted discussions regarding the greater use of SDR, a basket of currencies defined and maintained by the IMF.
His comments were linked to China’s push for a more renminbi monetary system, which includes the international operations centre of Shanghai, in line with multiple announcements on Wednesday.
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