As China’s yuan marches on its road of internationalization, Yi Gang, deputy governor of the People’s Bank of China believes the currency would become more and more stable in the international monetary system.
Yi voiced the expectation to Shanghai Securities News during China’s parliamentary meeting, adding that the central bank would carefully prevent and control financial risks.
Based on this year’s government work report, China would continue to improve market-based yuan exchange rate formation mechanism. Yi indicated this means yuan would remain stable and with the marching of internationalization, more cross-border deals and investment would start to use China’s yuan.
“We treat various currencies including US dollar, Japanese yen and euro, on an equal basis. If companies choose to make deals using China’s yuan, we think it’s a good thing and they would save transaction cost,” Yi said.
China has formally joined the Special Drawing Rights (SDR) basket of International Monetary Fund (IMF) last year, while maintaining an upbeat and strong momentum in general.
This year’s government work report also made it clear that non-performing assets, bond defaults, shadow banking and internet finances are the four major financial risks in the country. According to Yi, potential risks do exist in the sectors although they are controllable generally. “(We) should take proactive measures to relieve risks while preventing ethical risks and let adventurous institutions and entities benefit (from their wrongdoings).”said Yi.
Yi also noted China’s central bank would focus on preventing systemic risks, and “keep in mind to prevent asset bubbles”.