(Bloomberg) — People’s Bank of China Governor Pan Gongsheng laid out in the clearest terms yet his vision for the future of a new global currency order after decades of dollar dominance, predicting a more competitive system will take root in the years to come.
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“In the future, the global monetary system could continue to evolve toward a situation where a few sovereign currencies co-exist, compete and check and balance each other,” Pan said Wednesday in a keynote speech at the annual Lujiazui Forum in Shanghai.
Pan said there have been discussions around the world on how to reduce excessive reliance on a single currency, adding that the yuan’s global status has risen in recent years.
Confidence in the US is waning after months of President Donald Trump’s erratic policymaking. Investors have been trimming dollar holdings of late, prompting European Central Bank President Christine Lagarde to talk about a potential “global euro moment.”
Since Trump reclaimed the White House this year, the dollar has lost more than 10% of its value against the euro, pound and Swiss franc and is down against every single major currency in the world.
Pan referenced comments from the ECB as saying the US dollar’s dominance is increasingly uncertain and the euro may play a more important role globally. Lagarde made a rare visit to Beijing last week and held talks with Premier Li Qiang, as China’s No. 2 official called for greater cooperation between his country and the ECB.
Speaking at the same event in Shanghai, Wang Xin, director of the research bureau under the PBOC, warned that while market confidence in the dollar has weakened, its future status will depend on how other currencies develop.
“It would be an improvement if we go from a system that overly relies on the dollar to one where several major currencies compete with each other, which would impose both incentives and constraints on countries that issue those currencies,” he said.
China has also been positioning the yuan as a rival to the US dollar. It’s an extension of efforts by President Xi Jinping to build China into a financial power with a currency that’s stable enough to play a rising role in global trade, especially as tensions with the US erupted during Trump’s second term.
The tariff risks this year have intensified that initiative, with some US exporters asking for settlement in alternative currencies, including the yuan, to contain the impact of the dollar’s swings, according to an official at US Bancorp.
