Yuan’s ‘golden window’ is open, former PBOC governor says as US dollar credibility teeters
Zhou Xiaochuan, who laid the foundation for China’s currency to go global, says Beijing can capitalise on changes in the international monetary landscape
Faltering confidence in the US dollar has handed China a “golden window of opportunity” to promote the global use of its currency, according to a former head of the Chinese central bank.
“The core driving force behind the current changes in the international monetary system is the United States’ own policy choices,” Zhou Xiaochuan was quoted as saying in a report published on Sunday by the New Economist, a Chinese think tank.
He cited the broad application of American tariffs, the frequent use of the dollar in sanctions, and geopolitical conflicts as factors that have eroded the US currency’s global credibility.
“The current period is a golden window of opportunity for promoting the internationalisation of the renminbi,” Zhou was quoted as saying at the Shanghai Currency Forum earlier this month, using the official name of China’s currency.
Addressing key theoretical hurdles to the yuan’s internationalisation, Zhou argued that China’s trade surplus was not a barrier to currency exports, as the yuan could still be supplied to global markets via capital accounts and foreign loans. He also suggested that China did not need to match the massive debt issuance of the US to be successful, as actual global demand for reserve currencies is far lower than the total stock of US Treasuries.