MNI BRIEF: PBOC To Boost Yuan Use Despite Challenges Ahead

The People’s Bank of China will promote the cross-border use of the yuan in trade, investment and financing, and provide more products to facilitate foreign investor participation in the stock and bond markets, while improving the payment system and incorporating the currency's use into multilateral and bilateral agreement frameworks, Deputy Governor Tao Ling said Friday at the Caixin Summit 2025.

The attractiveness of yuan assets is rising as some monetary authorities issue panda bonds, central banks increase allocations to China’s fixed-income market, and companies show greater willingness to use the currency in investment, financing and trade due to its stability and lower cost, she said. Tao noted that the cross-border yuan payment system (CIPS) is also being upgraded, now covering more than 100 countries, and the PBOC has signed currency swap agreements with its counterparts.

However, yuan internationalisation still faces challenges as the U.S. dollar remains resilient and is leveraging stablecoins to consolidate its position in the global monetary system, she said, adding that the UK and Japan have taken similar steps, creating a more competitive landscape. In some emerging economies, path dependence on the dollar is unlikely to shift notably in the near term, she added. (See MNI INTERVIEW: Consumption, Upward Yuan Mark Beijing's Pivot)

Tao said there remains a long road ahead in capital account liberalisation. In offshore markets, yuan liquidity is insufficient and investable yuan assets need to be expanded, including more risk-management tools.