People’s Bank of China (PBOC) Governor Pan Gongsheng outlined his vision for a future global currency system that moves beyond decades of US dollar dominance. Speaking at the Lujiazui Forum in Shanghai on Wednesday, Pan predicted a more balanced system where several sovereign currencies coexist and compete.
“In the future, the global monetary system could evolve to a few sovereign currencies that check and balance each other,” Pan said. He noted ongoing global discussions on reducing overreliance on a single currency, highlighting the yuan’s rising international status in recent years.
Confidence in the US dollar has weakened amid months of unpredictable policies under President Donald Trump. Investors have been reducing their dollar holdings, prompting European Central Bank President Christine Lagarde to suggest a potential “global euro moment.” Since Trump’s return to the White House this year, the dollar has lost over 10% of its value against the euro, pound, and Swiss franc, and has declined against all major currencies.
Pan referenced ECB comments that question the dollar’s dominance and foresee a stronger global role for the euro. Lagarde recently visited Beijing and met with Premier Li Qiang, as China’s leadership called for closer cooperation with the ECB.
At the same forum, Wang Xin, director of the PBOC’s research bureau, said the dollar’s future depends on how other currencies develop. “Moving from a dollar-heavy system to one with several major competing currencies would create incentives and constraints for issuing countries,” Wang said.
China has been promoting the yuan as a credible alternative to the dollar. President Xi Jinping aims to build China into a global financial power with a stable currency suitable for international trade. Trade tensions with the US have accelerated this push, with some US exporters seeking yuan settlements to reduce dollar volatility risks.
The PBOC has shifted from supporting yuan weakness to preventing rapid appreciation. After hitting its lowest level since 2007 in April, the onshore yuan has rebounded, gaining over 1% this quarter.
Pan announced new measures to open China’s financial markets and boost the yuan’s global use. These include creating an operations center to advance the digital yuan internationally, exploring yuan futures trading, and encouraging trade firms to issue offshore bonds in Shanghai.
Pan also urged countries with widely used currencies to take responsibility by pursuing economic reforms and strengthening fiscal and financial regulations. He said a multi-currency global system would be more resilient and promote global financial stability.
Regarding alternatives, Pan mentioned the International Monetary Fund’s special drawing rights (SDRs) as a possible “super-sovereign” currency. Former PBOC Governor Zhou Xiaochuan had previously advocated for a greater global role for SDRs, arguing they could stabilize the global financial system.
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