People’s Bank of China’s deputy governor Fan Yifei said the country’s commitment to yuan internationalisation is long-term, and policy makers will keep pushing towards that objective.
Boosting the currency’s global role is a market-driven process and a natural result of China’s financial opening, Fan said in a speech yesterday in Sydney, according to a statement released on the central bank’s website. He said policy makers are confident in maintaining financial stability and achieving their full-year economic growth goal of around 6.5%.
The quest for a globalised yuan has been undermined as authorities tightened controls to help curb capital flowing out of the country after the yuan last year posted its steepest decline in more than two decades. Swift data show global transactions using yuan fell to 1.78% in March, down from a record 2.79% share in August 2015. While outflows are easing for now, loosening the control too quickly could fuel future risks. Fan said a digital currency backed by the central bank has the potential to exert a negative impact on financial stability and security, which makes it important for policy makers to conduct further research on the topic. Meanwhile, the central bank should also step up oversight of private cryptocurrencies, he told a gathering of the RMB Global Cities Dialogue.
The central bank is among the first working to create its own digital money, conducting trial runs of a prototype earlier this year. Fan is one of the key PBoC officials leading the effort.
Reserve Bank of Australia governor Philip Lowe, speaking at the same forum on yuan internationalisation, said China should be wary of the message investors take from capital curbs as they may be interpreted as concern about the economy.
“One consideration is the signal that a tightening of controls, after several years of liberalisation, could send to investors about how the government perceives the balance of risks facing the economy,” Lowe said in a speech text prepared for delivery to the forum.