The People’s Bank of China, China’s central bank, will continue to support the development of offshore Chinese yuan market and cross-border payment system.
According to an interview published by the People’s Bank of China, the deputy governor Tao Ling discussed the future steps of promoting the country’s legal tender in the global market and how it can be further internationalized.
Offshore Market and Cross-Border Payment System
Tao stated that the central bank has been adapting to the domestic and international economic situation and market demands, providing domestic and international businesses with a more diversified and convenient currency choice.
Currently, yuan has become the fourth most used currency for global payments, the third most used currency in trade financing, and the fifth most traded currency in foreign exchange markets.
The bank will support the development of the offshore CNY market by enhancing the liquidity supply mechanism, improving the long-term issuance of sovereign bonds overseas, and expanding financial market interconnectivity between the mainland and Hong Kong.
Additionally, the bank will focus on establishing and improving financial infrastructure. This includes enhancing the service capabilities and range of the Cross-border Interbank Payment System (CIPS) for yuan.
Regarding cross-border transactions, Tao said the bank’s other goals include increasing the security and efficiency of yuan clearing and settlement, optimizing the layout of CNY clearing banks, and effectively utilizing currency swap mechanisms to promote the construction of the overseas market.
In March 2024, Tao was appointed the first female deputy chief of the People’s Bank of China in the past nine years. She has been an experienced central banker and financial regulator.
SWIFT China President Reveals CBDC Challenges
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) China President Wen Yang previously shared his insights challenges and solutions for cross-border central bank digital currency (CBDC).
“Currently, there are significant differences in the technological paths and standards, including protocols, among economies, which presents a ‘fragmentation’ challenge and leads to ‘data silos’,” said Yang.
Yang indicated that SWIFT will expand its CBDC solutions to simplify digital transactions and enhance support for on-chain forex settlements and cross-border payments.
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