Xi Says Yuan Needs to Become Global Currency
The yuan emerged as the second most-used trade finance currency after the US dollar following the escalation of the Ukraine conflict in February 2022, when sanctions on Moscow prompted nations to increasingly conduct trade in their own currencies. Despite this, the yuan’s share in official reserves remains relatively small.
Beijing should ensure the yuan becomes “a strong currency, which is widely used in international trade and investment, and foreign exchange markets, and has the status of a global reserve currency,” Xi wrote in the Communist Party journal Qiushi on Saturday. He also emphasized the importance of backing the currency with “a powerful central bank.”
Xi argued that these reforms are crucial for China to become a genuine “financial powerhouse,” noting that while the country’s monetary system is currently large, it is “not strong enough.”
Last year, Chinese Central Bank Governor Pan Gongsheng cautioned against “excessive reliance” on the US dollar and highlighted the growing prominence of the yuan. He suggested that the global monetary system could evolve into one where a small number of sovereign currencies coexist, compete, and balance each other.
Meanwhile, Germany’s financial regulator BaFin recently warned that the dollar’s dominance as the world’s reserve currency could face challenges as early as 2026 due to funding pressures, geopolitical tensions, and increasing politicization. The warning came after the Bloomberg Dollar Spot Index suffered its steepest decline since April, following US President Donald Trump’s announcement of broad global tariffs. Trump downplayed concerns, saying the dollar is “doing great” and should be allowed to “seek its own level.”
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