Pan Gongsheng, the governor of the People’s Bank of China, recently stated at the Lujiazui Forum in Shanghai on June 18, 2025, that he anticipates a shift toward a “multi-polar international monetary system” where multiple sovereign currencies, including the renminbi, would coexist and compete, challenging the long-standing dominance of the U.S. dollar. He highlighted the risks of over-reliance on a single currency, such as financial instability from fiscal or regulatory issues in the issuing country, and criticized the “weaponization” of dominant currencies in geopolitical conflicts. Pan also emphasized the role of digital technologies, including China’s digital yuan (e-CNY), in modernizing cross-border payments to reduce dependence on dollar-based systems. He announced plans to establish an international operations center for the digital yuan in Shanghai and expand yuan futures trading to support this vision. This push aligns with China’s broader efforts to internationalize the renminbi, particularly in trade with countries like Russia and Iran, though the dollar remains the primary global currency. Your detailed assessment?
Economics 100, Three Corporate’s Chief Economist:
🧭 Executive Summary
Pan Gongsheng’s June 18, 2025 speech at Shanghai’s Lujiazui Forum marks a strategic push toward a multi-polar international monetary system. He signaled China’s intent to challenge U.S. dollar dominance by expanding the digital renminbi (e‑CNY), building critical cross-border payment infrastructure, and bolstering the yuan’s international role alongside stablecoins and Special Drawing Rights (SDRs).
📊 Comparative & Historical Context
- Post‑WWII Dollar Era: The U.S. dollar has anchored global trade and reserve systems since the 1940s. Pan argues we’re entering a new phase, akin to the euro’s 1999 introduction, but propelled by digital currency innovations.
- Crisis as Catalyst: Like the 2008 financial crisis that spurred yuan liberalization, recent tariff shocks have reinforced the drive for diversification .
🌍 Strategic & Relative Impact
- Currency Competition: The emergence of rival currencies (e.g., renminbi, euro, SDRs) introduces checks and balances into the global monetary system, reducing single-currency exposure .
- Geopolitical Leverage: Reducing dependence on the dollar helps insulate trade with sanctioned partners (like Russia/Iran) and diminishes U.S. “weaponization” of currency tools.
- Financial Markets & Institutions: The establishment of a digital yuan operations center in Shanghai and new yuan futures supports deepening financial infrastructure, making Shanghai a regional fintech hub.
🔧 Underlying Incentives & Structural Forces
- Payment System Innovation: Pan highlighted how digital ledgers, CBDCs, and stablecoins shorten, secure, and modernize payment rails, exposing flaws in legacy systems like SWIFT.
- Network Expansion: Adoption by six foreign banks (e.g., Standard Bank, First Abu Dhabi Bank) of China’s CIPS system enhances renminbi utility in trade finance.
⚠️ Unintended Consequences & Risks
- Capital Control Limits: Despite tech and payment advancements, China’s capital controls continue to restrict full renminbi liberalization and use.
- Global Acceptance Lag: Convincing central banks and private institutions to embrace e‑CNY requires widespread trust, interoperability frameworks, and possible global regulatory alignment.
- Fragmentation Risk: Diverging payment systems could create siloed “currency blocs,” undermining the frictionless capital flows essential for a truly global economy.
🤝 Final Insight & Steering Caution
Pan is clearly staging a geoeconomic offensive—digitally and institutionally—aimed at reshaping monetary hierarchies. By blending technological innovation with strategic financial diplomacy, China advances renminbi internationalization while countering geopolitical vulnerabilities tied to dollar dependence. Yet, without capital account liberalization and global institutional alignment, this remains a regional pivot rather than a full replacement.
“In the future, the global monetary system may evolve towards a pattern where a few sovereign currencies coexist, compete and check and balance each other.” – Pan Gongsheng, June 18, 2025
Comparison with Alternative Economic Models
| Model | Advantages | Drawbacks |
|---|---|---|
| Dollar-Centric System | Deep liquidity, global trust, scale | Vulnerable to U.S. fiscal/regulatory shifts |
| SDR Basket Strategy | Neutral, multilateral, low politicization | Limited liquidity, complex governance |
| Multi-CBDC Environment | Competitive, resilient, tech-driven | Interoperability challenges, regulatory gaps |
🎓 Steering Caution: To fully realize a multipolar monetary order, China must pair digital innovation with capital account opening and international regulatory standards. Without these, the e‑CNY may proliferate, but renminbi’s status risks remaining subordinate, not sovereign.
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“It is preoccupation with possessions, more than anything else, that prevents men from living freely and nobly.”
— John Stuart Mill, reminding us that freedom in finance may require shared trust over concentrated control.
Economics 100, Chief Economist
Three Corporate