China Pushes Digital Yuan and Multi-Polar Currency System Amid Global Shift

China’s central bank has reaffirmed its commitment to promoting the digital yuan (e-CNY) internationally, with Governor Pan Gongsheng advocating for a multi-polar global currency system. At the Lujiazui Forum in Shanghai, Pan announced the creation of an international operations center for the digital yuan in the city. This move is part of China’s broader ambition to diversify the global monetary landscape and reduce reliance on the U.S. dollar, especially as geopolitical tensions and trade disputes grow.

Pan emphasized that a multi-polar currency system—where several key currencies coexist and balance each other—would enhance global financial stability and reduce the dominance of any single sovereign currency. He argued that such diversification would make the international monetary system more resilient and better equipped to handle economic shocks, while also acting as a check on countries with global currency influence, like the United States.

Amid growing dissatisfaction with the U.S. dollar due to aggressive American tariff policies and financial sanctions, China is positioning the yuan, especially its digital form, as a viable alternative. The rise of cryptocurrencies and stablecoins has further highlighted the need for updated financial systems. In this context, Pan criticized traditional cross-border payment infrastructures as inefficient and vulnerable to political manipulation.

China’s ambition to internationalize the yuan is longstanding but has been limited by its closed capital account. Still, progress is being made in other areas. Six foreign banks, including Standard Bank and First Abu Dhabi Bank, have agreed to use China’s Cross-Border Interbank Payment System (CIPS), a significant step in integrating the yuan into global trade mechanisms. China is also leveraging digital technologies to bypass traditional financial systems and reduce geopolitical risk exposure.

Further signaling openness, top Chinese financial regulators pledged to stabilize the yuan’s exchange rate and expand access to China’s financial markets for foreign investors. Officials at the forum reiterated Beijing’s commitment to creating a predictable and attractive environment for global financial institutions. With China’s consumer market rapidly growing, regulators believe there will be increasing opportunities for international financial firms to participate in and contribute to China’s evolving financial system.

Source: Reuters