Chinese currency internationalization quickening

▶ The yuan sees rising demand after lessening cross-border restrictions

The Chinese yuan has made significant progress in its internationalization process in recent years, propelled by rising market demand and there is still huge room for accelerating its internationalization as foreign demand continues to increase, a top central bank official said on Tuesday.

In a speech to a forum on the sidelines of the ongoing China’s International Import Expo in Shanghai, Pan Gongsheng, deputy governor of the People’s Bank of China (PBC) stressed that the continued rise of the yuan on the global stage is market-driven and that China will continue to implement incremental reforms.

“The internationalization of the yuan is a natural process driven by the market,” Pan pointed out in the speech, read by another PBC official at the forum because he could not deliver it himself in person. He also wrote that the PBC and other regulators embraced the trend and cleared regulatory obstacles.

“During the process, [China] did not take any special or favorable policies other than clearing out previous policies that restricted the yuan’s crossborder use and place the yuan at the same position as other global currencies and emerging currencies to compete,” Pan wrote.

He noted that due to rising demand, the yuan’s internationalization has been “persistent and fast,” pointing to the rise of the yuan in global payments, the yuan’s use in investment and fund-raising, its enhanced role as a reserve currency and stable growth of the yuan’s offshore trading.

But there is still huge room for the yuan’s internationalization, he wrote.

“As China’s reform and opening up continue to deepen, the international community’s confidence in the Chinese economy will further improve and the willingness to use the yuan will also increase,” Pan wrote.

He noted that China will continue to carry out incremental market reforms to prop up the yuan’s continued internationalization.