The People’s Bank of China, the country’s central bank, will continue to support the development of an overseas market for the Chinese yuan and a cross-border payment system.
According to an interview published by the People’s Bank of China, Deputy Governor Tao Ling discussed future steps in promoting the country’s legal tender in the global market and opportunities for its further internationalization.
Tao said the central bank is adapting to the domestic and international economic situation and market requirements, providing domestic and international businesses with a more diverse and convenient choice of currency.
At present, the yuan has become the fourth most used currency in global payments, the third most used currency in trade finance and the fifth most used currency in foreign exchange markets.
The Bank will support the development of the overseas CNY market by improving the liquidity delivery mechanism, streamlining long-term government bond issuance overseas, and expanding financial market interconnections between the mainland and Hong Kong.
In addition, the bank will focus on establishing and improving financial infrastructure. This includes improving the service capabilities and coverage of the Cross-Border Interbank Payment System (CIPS) for yuan.
Regarding cross-border transactions, Dao said the bank’s other goals include enhancing the safety and efficiency of yuan clearing and settlement, optimizing the layout of CNY clearing banks, and making effective use of foreign exchange mechanisms to promote foreign market construction.
In March 2024, Tao became the first female deputy head of the People’s Bank of China in the past nine years.
SWIFT’s China president reveals CBDC challenges
The President of the Society for Worldwide Interbank Financial Telecommunication (SWIFT) in China, Wen Yang , previously shared his insights, challenges and solutions to the central bank’s cross-border digital currency (CBDC).
“Currently, there are significant differences in technology paths and standards, including protocols, between economies, which poses the challenge of ‘fragmentation’ and leads to ‘data silos’,” – Yang said.
Yang indicated that SWIFT will expand its CBDC solutions to simplify digital transactions and increase support for foreign exchange settlement in the supply chain and cross-border payments.
