China’s yuan: Beijing to build solid ‘breakwater’ to curb risks amid accelerating internationalisation push

Central bank to pursue global use of yuan while maintaining stability after Xi Jinping said it should be conducted in a ‘steady, prudent and solid’ manner

It will also support more overseas central banks, international development institutions and multinational enterprises to issue panda bonds

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Overseas use of the yuan has made proogress this year, although it has yet to challenge the hegemony of the US dollar. Photo: Reuters

Published: 12:00am, 11 Nov 2023Updated: 1:15am, 11 Nov 2023

Despite an accelerating pace of yuan internationalisation in the past year, Beijing has cautioned against imprudence by prioritising security amid rising external uncertainties.

In a column published on Thursday, China’s central bank vowed to pursue progress in the global use of yuan while maintaining stability, and also continuously improving the capabilities of management and risk prevention of cross-border capital flows under the condition of opening up.

“At present, the pace of diversification of the international monetary system is accelerating, business entities have increased endogenous demand for the use of yuan, and the international environment is also complex and ever-changing,” the People’s Bank of China’s (PBOC) said in the article.

“[We must] build a solid ‘breakwater’ … and maintain the bottom line of preventing systemic financial risks.”

The general impression is that to prevent risks, supervision must be strengthened

Ding Shuang

The article came as President Xi Jinping said that promoting yuan internationalisation should be conducted in a “steady, prudent and solid” manner at the twice-a-decade central financial work conference last month.