The Central Bank of the Republic of China delivered a speech at the Lujiazui Forum on “global financial governance”, reiterating that it has maintained a supportive monetary policy stance over the past year while continuing a gradual evolution of its monetary policy framework. It argued that growing tensions in the international monetary and payment system strengthen the case for diversification away from reliance on a single dominant sovereign currency and for reforms that reduce the scope for spillovers and politicisation. On the international monetary system, the speech outlined two broad reform directions: a shift toward a small number of strong sovereign currencies that compete and constrain one another, and a greater role for a supranational currency, most notably the International Monetary Fund’s Special Drawing Rights (SDR). It highlighted the euro’s share of global foreign exchange reserves at around 20% and noted the rise of the renminbi in trade finance and payments and in the SDR basket. For the SDR, it pointed to options including more regular issuance and a larger scale of issuance beyond crisis-driven, one-off allocations, alongside measures to broaden use by the private sector in trade and investment, develop SDR-denominated bonds, and build settlement arrangements capable of supporting wider SDR use. On cross-border payments, the speech focused on persistent frictions in traditional models, the need for stronger international coordination across legal and regulatory frameworks, and the risk that payment infrastructure becomes “weaponised” in geopolitical disputes. It described ongoing trends toward local-currency settlement, the emergence of new cross-border and regional multilateral payment systems, and improving interoperability through extended operating hours, common messaging standards, fast payment links and QR-code connectivity in parts of Asia, while noting that technologies such as distributed ledgers, central bank digital currencies and stablecoins are reshaping payment and settlement and creating new regulatory challenges. The remarks also flagged risks to global financial stability from fragmented regulation and inconsistent implementation of international standards, gaps in oversight for crypto-asset markets, climate-related frameworks and artificial intelligence, and weak regulation of non-bank intermediaries, while calling for a strong IMF at the core of a multi-layered global financial safety net and for IMF quota and voting share reforms to better reflect members’ relative positions in the global economy.

Original source View in tracker