(Bloomberg) — The People's Bank of China said President Xi Jinping envisions a “strong currency” that is stable and easy to use, pledging to play a key role in building a competitive financial system and supporting the top leader's strategy.
A strong currency should have a stable value domestically and maintain an exchange rate that is “basically stable” and at a “reasonable and balanced level” externally, Tao Ling, vice governor of the People's Bank of China, said in an interview published by the central bank on Thursday.
He added that the yuan must be easy to use, efficient and safe. The currency should be widely used in international markets for settlement, financing and reserve purposes, Tao told the central bank-controlled Financial News.
President Xi has urged efforts to turn China into a financial powerhouse, including by cultivating a strong currency and a strong central bank. This underscores China's efforts to strengthen the international use of the yuan, whose use in global financial transactions remains inadequate relative to the size of its economy due in part to strict capital controls and a lack of liquidity in yuan-denominated capital markets.
Tao said the PBoC will also build a financial system that is highly aligned with its goal of strengthening the country's technological capabilities. The central bank will draft policy documents to better support tech companies, with an emphasis on startups.
The comments, which were a response to a recently published book of Xi's finance speeches over the years, reflect the government's continued focus on preventing big fluctuations in the yuan, despite mounting downward pressure in recent weeks.
The PBOC will promote greater global use of the yuan by further developing hedging instruments for yuan assets and promoting the functioning of China's own payment settlement system, known as CIPS, Tao said. China will help foreign central banks and international organizations issue so-called panda bonds in China and improve mechanisms for issuing government bonds in offshore markets.
The renminbi is seeing a steady, albeit still relatively small, rise in global usage: The share of renminbi payments made through the international payments system Swift reached a record high of 4.7% in March.
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