Stronger RMB seen stabilizing currency system

A more multipolar currency landscape — in which the Chinese renminbi could play a much larger role — is gaining traction, as intensifying geopolitical tensions and the rapid rise of emerging economies strain the traditional international monetary system, economists said.

"The world needs a new and balanced monetary system," Zhu Min, former deputy managing director of the International Monetary Fund, told China Daily during the two-day Tsinghua PBCSF Global Finance Forum, which concluded on Tuesday in Chengdu, Sichuan province.

"A strong renminbi represents the needs of Global South countries, the needs of the global financial system, and also the needs of China's economy to further grow and strengthen," Zhu said.

He pointed to a fundamental imbalance in the current international monetary system. While the United States' share of global GDP has dropped to about 24.5 percent and its share of world merchandise exports is just about 9 percent, the US dollar still accounts for 58 percent of global reserve currencies — far exceeding its underlying economic weight.

In contrast, Zhu said, China now accounts for about 16.6 percent of global GDP and 14.4 percent of world merchandise exports, yet the renminbi's share in global reserves is merely 2.4 percent.

"The gap between China's real economy weight and its currency's international status is the core driving force for renminbi internationalization," Zhu said.

Djoomart Otorbaev, former prime minister of the Kyrgyz Republic, said that countries accept the greenback not because they prefer it, but because in times of crisis, the dollar can provide stable liquidity and expectations.

However, more and more financial tools have been weaponized, even used as weapons in geopolitical conflicts. This trust has been severely eroded, Otorbaev said.

The gradual erosion of the greenback's dominance is already visible. A Deutsche Bank research report released earlier this month said the dollar's share of global foreign exchange reserves has fallen from over 60 percent to just 40 percent.

Marc Uzan, executive director of the Reinventing Bretton Woods Committee, said that central banks around the world have diversified their reserves, more energy deals are being priced in non-dollar currencies and countries are increasingly settling bilateral trade in their own currencies.

That said, Uzan acknowledged that the dollar's structural advantages remain significant, and he cautioned against expecting a swift end to dollar hegemony.

Nevertheless, he expects the future international monetary system will be multipolar, with the US dollar, the euro and the renminbi all playing significantly larger roles. Regional currencies will also assume more functions in their respective neighborhoods.

In March, the renminbi ranked fifth in global payments with a share of 3.1 percent, up from sixth place in February, said global financial messaging services provider SWIFT.

Shi Kang, chair professor at the PBC School of Finance at Tsinghua University, said that the renminbi's participation in the reshaping of the global monetary order is "deliberate and measured".

"We do not want to replace the US dollar system, nor are we trying to develop a separate system," Shi said. "China's goal is to address the weak links in the current monetary system, allowing more currencies to participate and thus enhance global financial stability."

Cross-border renminbi settlement volume reached 6.4 trillion yuan ($941 billion) in 2024 and climbed further to 7 trillion yuan in 2025, Shi said.

To mitigate the risk of unilateral disruptions to the SWIFT messaging system, China has built its own Cross-border Interbank Payment System (CIPS), which has significantly improved the efficiency and security of cross-border settlements, he added.

China has also signed various bilateral currency swap agreements, providing liquidity support to emerging markets such as Argentina. These swaps act as a safety net for countries facing dollar shortages, reducing their dependence on a single currency, Shi said.

Looking forward, Shi said China will eventually open its current account in an orderly and prudent manner, offering more renminbi-denominated assets to global investors.

wangkeju@chinadaily.com.cn