RMB Internationalization Rises Steadily: Chinese and Foreign Scholars See Greater Room for the Yuan

As geopolitical tensions continue to erode traditional trade ties, the search for financial risk diversification has become a growing consensus among nations, and calls for reform of the international monetary system are getting louder. As a sovereign currency whose international standing has risen steadily, the RMB is now facing a historic opportunity. On the opening day of the 17th Annual Meeting of the New Champions — the 2026 Summer Davos Forum — participants from China and abroad gave a unified thumbs-up to progress in RMB internationalization and expressed confidence that the yuan will have a larger role to play on the global stage.

Earlier this year, the People’s Bank of China renewed bilateral local-currency swap agreements with the Bank of Canada, the Central Bank of Egypt, and the Bank of the Lao People’s Democratic Republic — a series of moves that have drawn close attention from overseas markets.

“This is not about picking sides in a currency competition. It’s because we do not want to rely on a single currency,” said Ashor Nick Sarupen, Deputy Minister of Finance of South Africa, noting that at the end of 2025, South Africa’s Standard Bank became the first African bank to connect directly to China’s Cross-Border Interbank Payment System (CIPS). Thanks to the bilateral local-currency swap agreement already signed by the two central banks, RMB settlement within the CIPS network will become much more convenient.

Zhu Ning, Vice Dean and Professor of Finance at the Shanghai Advanced Institute of Finance (SAIF), pointed out that the PBoC has spent years pushing the development of offshore RMB centers and has launched a wide range of financial products to promote the broader international use of the RMB. As the resilience of China’s economy continues to strengthen, international interest in holding RMB is on the rise. Stable overall economic performance, the vibrant development of onshore and offshore RMB centers in mainland China and Hong Kong, and mechanisms such as currency swaps that support future transactional needs are all encouraging countries to use the RMB to hedge geopolitical risk.

PBoC Governor Pan Gongsheng has previously stressed that a strong currency can better perform the functions of a unit of account, medium of exchange, means of payment, and store of value. It strengthens the confidence of currency holders, meets the needs of opening up and cross-border investment and financing, and provides a favorable monetary and financial environment for healthy economic development.

“From the perspective of the core functions of money, the internationalization of the RMB has made significant progress in recent years,” said Zongyuan Liu, Senior Research Fellow on China at the Council on Foreign Relations. She noted that the RMB has performed strongly in transaction and settlement functions, while substantial room remains to grow in its reserve and pricing functions. Especially against the backdrop of oil no longer being the sole primary reserve anchor globally, the RMB has significant potential as an important pricing currency.

Since the second half of last year, the RMB exchange rate has gradually strengthened. Year-to-date, the U.S. dollar index has remained volatile at elevated levels, while the onshore RMB has appreciated against the dollar in a counter-trend move. The CFETS RMB Index, which measures the RMB against a basket of currencies, has gained nearly 3.4% so far this year.

Zhu Ning believes that strong economic resilience and a stable economic environment are the main factors supporting the recent appreciation of the RMB. The fundamentals for RMB appreciation remain solid, but policymakers need to guard against the impact of any overly rapid rise on exports.

A number of Chinese and foreign scholars also pointed out that in recent years, the PBoC has consistently signaled its determination to guard against excessive exchange rate swings and maintain basic stability of the RMB. “The PBoC has done an excellent job in exchange rate management, especially in stabilizing market expectations,” said Liu.

“China has consistently opposed competitive devaluation, hoping to provide the world with a stable sovereign currency,” noted Diana Choyleva, Founder and Chief Economist at Enodo Economics. She added that for years, the PBoC has worked to keep the RMB exchange rate basically stable at a reasonable and equilibrium level, and in the future may appropriately widen the tolerance band for exchange rate fluctuations.