The head of China's central bank, has committed to broadening the reach of the digital yuan, reinforcing the nation's ambition for its central bank digital currency.
A Reuters report [1] reveals that China is establishing a global operations centre in Shanghai for its digital currency, the digital yuan or e-CNY. The announcement was made by Pan [2] during the Lujiazui Forum, an influential event that gathers top financial regulators and executives from around the world. Pan articulated China's aspiration for a "multipolar" currency system, where various currencies would underpin the global economy. This vision stands in stark contrast to the existing financial landscape, dominated by a limited number of currencies, particularly the US dollar and the euro.
Pan Gongsheng [3] who was appointed Party Secretary and Governor of the People’s Bank of China in 2023 said, “Traditional cross-border payment infrastructures can be easily politicized and weaponized, and used as a tool for unilateral sanctions, damaging global economic and financial order.” China [4] initiated efforts to develop a CBDC In 2014 and is now looking to enhance the digital yuan's use as a payment method both at home and abroad. This move aims to challenge the dominance of the US dollar as the world's reserve currency. The backdrop of these developments includes an ongoing trade war between the two nations, sparked by tariffs imposed during the Trump administration.
China is intensifying [5] its endeavors to establish financial systems that operate independently from Western institutions. This push has been fueled by changing trade dynamics and geopolitical shifts that are altering the global economic framework. “Developing a multi-polar international monetary system will help strengthen policy constraints on sovereign currency countries, enhance the resilience of the system, and better safeguard global financial stability. Traditional cross-border payment infrastructures can be easily politicised and weaponised, and used as a tool for unilateral sanctions, damaging global economic and financial order,” said Pan Gongsheng. Li Yunze who was made [6] the Director of the National Financial Regulatory Administration of China also said, “Foreign institutions are important bridges and links for attracting investment, talent, and are important participants and active contributors to the construction of China's modern financial system.”
Numerous countries are actively exploring the development of CBDCs. In Hong Kong, a special administrative region of China, officials are moving forward with a pilot programme for a stablecoin, a report from Visa, a leading payments company, [7] reveals that the initiative will feature an Australian investor interested in acquiring a tokenized asset in Hong Kong. Meanwhile, in Europe, legislators from various member states are intensifying their efforts to establish a digital euro. On May 30, the Bank of Italy [8] published its annual report, which included the governor's final comments on the current economic landscape. Fabio Panetta, [9] the Governor of the Bank of Italy emphasized the necessity for the European Union to advance the central bank digital currency initiative to ensure financial stability and address the growing demand for secure digital payment solutions.
The Central Bank of the United Arab Emirates or [10] has revealed plans to launch a retail central bank digital currency referred to as a digital dirham, later in 2025. Khaled Mohamed Balama [11] the Governor of the CBUAE said, “We are proud to unveil today the new symbol for the UAE's national currency the dirham in both its physical and digital forms, and the design of the Digital Dirham wallet. This reflects the significant advancements in the implementation of the digital dirham programme and a leap towards realising the CBUAE’s vision.”
However, a report released by [12] the Official Monetary and Financial Institutions Forum indicates that interest in central bank digital currencies is waning, [13] as 31% of central banks are postponing their implementation plans. The report highlights that key concerns shared among these institutions include regulatory challenges and prevailing economic conditions. Key reasons for the delays include “concerns with regulatory and governance” frameworks, unforeseen “economic challenges taking priority over CBDC work,” and “establishing legislation is also partially dependent on political will, rather than the central bank’s technical capacity or decision on policy,” according to the report.