“PBOC Chief Calls for Multipolar Currency System as China Accelerates Dedollarization Efforts”

Key Points

It seems likely that the PBOC chief, Pan Gongsheng, envisions a new world currency order after the dollar era, favoring a system with multiple competing currencies.
Research suggests this vision aims to reduce reliance on the US dollar, aligning with global trends and China’s efforts to internationalize the yuan.
The topic is debated, with some seeing it as a shift in global finance, while others highlight challenges due to the dollar’s entrenched dominance.

Background

Pan Gongsheng, Governor of the People’s Bank of China (PBOC), recently shared his vision for a future global monetary system during a speech at the Lujiazui Forum in Shanghai on June 18, 2025. This vision moves away from the dominance of the US dollar, proposing a system where several sovereign currencies coexist, compete, and balance each other.

Details and Context

His proposal comes at a time when the US dollar has weakened, losing over 10% against major currencies like the euro, pound, and Swiss franc since Donald Trump’s return to the White House earlier in 2025. This weakening, coupled with global discussions on reducing reliance on a single currency, has fueled interest in alternatives. China is actively promoting the yuan’s global status, with initiatives like digital yuan internationalization and encouraging offshore yuan bonds, reflecting efforts to position it as a rival to the dollar.

Implications

While this vision aligns with broader calls for de-dollarization, challenges remain. China’s financial system is still heavily dependent on the dollar, with significant portions of its reserves and debt denominated in dollars. Efforts to diversify, such as increasing renminbi use in cross-border payments (now over 50% by mid-2024) and reducing US treasury holdings, are underway, but market constraints and trade imbalances complicate a full shift.

Survey Note: Detailed Analysis of PBOC Chief’s Vision for a New World Currency Order

This note provides a comprehensive examination of the PBOC chief’s vision for a new world currency order following the era of dollar dominance, as articulated by Pan Gongsheng, Governor of the People’s Bank of China, during his keynote speech at the annual Lujiazui Forum in Shanghai on June 18, 2025. The analysis draws on recent news articles, research reports, and social media discussions to offer a detailed perspective on the topic, reflecting its significance in global finance and the complexities involved.

Overview of the Vision

Pan Gongsheng’s vision entails a future global monetary system where multiple sovereign currencies coexist, compete, and balance each other, moving away from the historical dominance of the US dollar. This proposal was presented in a high-profile setting, underscoring China’s strategic intent to reshape international financial dynamics. The speech highlighted a desire for a multipolar currency system, which aligns with President Xi Jinping’s broader goal of positioning China as a global financial power.

Context and Timing

The timing of this vision is notable, given recent economic developments. The US dollar has experienced significant depreciation, losing more than 10% of its value against major currencies such as the euro, pound, and Swiss franc since Donald Trump’s reclamation of the White House earlier in 2025. This weakening, reported in articles from Yahoo Finance and The Edge Malaysia, has contributed to waning global confidence in the dollar, exacerbated by perceptions of erratic US policymaking under the current administration.

Global discussions on reducing excessive reliance on a single currency have gained traction, with the European Central Bank President Christine Lagarde discussing a potential “global euro moment” during a visit to Beijing, as noted in the same reports. This context provides a backdrop for Pan Gongsheng’s proposal, reflecting a broader shift in international financial sentiment.

China’s Efforts to Internationalize the Yuan

Central to Pan Gongsheng’s vision is the internationalization of the Chinese yuan (renminbi), which has seen rising global status in recent years. Specific initiatives include:

Establishing an operations center for digital yuan internationalization.
Exploring yuan futures trading to enhance market liquidity.
Encouraging trade companies to issue offshore bonds in Shanghai, as detailed in The Edge Malaysia.

By mid-2024, the renminbi’s share in cross-border payments surpassed 50%, up from 48% in early 2023, according to a report from the Carnegie Endowment for International Peace

. This marks a significant shift, with the dollar’s share in these payments dropping from 70% in 2016 to less than 50% in 2023, indicating a gradual move toward diversification.

Challenges and Dependencies

Despite these efforts, China’s financial system remains deeply integrated with the dollar. The Carnegie Endowment report highlights that an estimated 50-60% of China’s $3.10-$3.29 trillion foreign exchange reserves (from January 2023 to August 2024) are dollar-denominated, totaling around $1.9 trillion. Additionally, over $1.1 trillion of China’s external debt by late 2023 was dollar-denominated, with $418 billion in cross-border dollar liabilities from the banking sector alone. Hong Kong’s Exchange Fund, a key part of China’s financial reserves, held over 80% ($420 billion) in dollar assets, and the four largest state-owned banks reported $460 billion in dollar liabilities and $300 billion in dollar-denominated securities holdings in 2023.

These figures underscore the challenges of reducing dollar dependence. Efforts to diversify include increasing gold reserves from 3.4% to 4.9% between November 2022 and April 2024, and an 11% decline in US treasury holdings over the same period. However, total dollar reserves likely remained constant, indicating the difficulty of significant reallocation without affecting currency values or facing market depth issues.

Global and Regional Perspectives

The vision for a multipolar currency system is not isolated to China. Discussions on de-dollarization have been prominent, with some Chinese officials and academics endorsing a system where the renminbi, euro, and dollar play significant roles, as noted in the Carnegie report. However, there are caveats: Yu Yongding, a former central bank committee member, warned against diversifying into euros and yen due to similar geopolitical risks, given the potential for sanctions similar to those imposed on Russia.

Globally, central bank reserves data from the IMF (Q2 2024) shows the dollar at 58.22%, the euro at 19.76%, and the yen at 5.59%, limiting diversification options due to market constraints. The Carnegie report also compares China’s situation to Russia’s, which reduced dollar reserves dramatically between 2017-2018 and 2020-2021, only to have $300-$350 billion frozen (mostly euros, over $65 billion dollars) in 2022 sanctions, highlighting the risks of rapid dedollarization.

Social Media and Public Discourse

Recent X posts reflect the topic’s relevance and public interest. For instance, on June 18, 2025, @HectorRTorres2 shared a link to a Financial Times article titled “China’s central bank chief expects new currency order to challenge dollar”

These posts, with significant view counts (e.g., 22,002 for @YuanTalks), indicate widespread attention and discussion on social media platforms.

Older posts, such as @Sino_Market’s on April 9, 2025, about the PBOC asking major state-owned banks to reduce dollar purchases

further illustrate ongoing efforts to shift away from dollar dominance, with 127,550 views reflecting public interest.

Policy and Economic Implications

Pan Gongsheng’s speech did not announce major monetary policy moves, which disappointed some investors, as noted in The Edge Malaysia. Previously, in May 2025, the PBOC had cut interest rates and the reserve requirement ratio to counter downside risks, indicating a cautious approach to monetary policy amidst global uncertainties.

The vision also touches on international financial institutions, with calls for IMF quota reforms to reflect emerging economies’ rising share, with the deadline pushed to April 2026 from June 2025. The promotion of super-sovereign currency via IMF’s special drawing rights (SDRs) lacks consensus and requires regular larger issuance, adding complexity to the transition.

Comparative Analysis: Currency Shares and Diversification

To illustrate the current landscape and potential shifts, consider the following table summarizing global central bank reserve currency allocations and China’s efforts:

Currency	Global Reserve Share (Q2 2024, IMF)	China’s Cross-Border Payment Share (Mid-2024)	Notes
US Dollar	58.22%	<50% (down from 70% in 2016)	Dominant, but weakening
Euro	19.76%	N/A	Potential “global euro moment” discussed
Japanese Yen	5.59%	N/A	Limited diversification option due to market depth
Chinese Renminbi	N/A	>50% (up from 48% in early 2023)	Rising, key to dedollarization efforts

This table highlights the dollar’s current dominance and the renminbi’s growing role, though challenges remain in scaling up to match the dollar’s global presence.

Conclusion

Pan Gongsheng’s vision for a new world currency order after the dollar era is a strategic move to reduce reliance on a single currency, aligning with China’s economic ambitions and global trends. However, the transition faces significant hurdles due to the dollar’s entrenched position, China’s own financial dependencies, and market constraints. The ongoing efforts to internationalize the yuan, coupled with global discussions on diversification, suggest a gradual shift, but the path forward remains complex and contested.