China Bets on the Yuan to Break the Dominance of the US Dollar

SadaNews Economy - The People's Bank of China has pledged to encourage external entities to finance in yuan, taking advantage of lower borrowing costs and increased foreign demand for the currency to expand its internationalization. SadaNews

China will support the use of yuan-denominated financial instruments, such as loans, "panda" bonds, and foreign bonds, enabling foreign institutions to easily access the currency, thereby contributing to enhancing the global liquidity of the yuan.

Low borrowing costs are one of the key advantages that Beijing is betting on, as loose monetary policy has kept Chinese bond yields much lower than those of their American counterparts, giving the yuan greater appeal as an international financing currency.

According to the "SWIFT" network, the yuan became the second most used currency in global trade financing last September with a share of 7.3%, while China has pledged to continue expanding its use in international transactions.

These loans are expected to help expand Chinese supply chains and enhance the currency's presence in international trade and investment.