On June 18th, Pan Gongsheng, governor of the People’s Bank of China, shared his views on global financial governance at the 2025 Lujiazui Forum, mainly focusing on four issues: the international monetary system, the cross-border payment system, the global financial stability system, and the governance of international financial organizations.
In light of the current international discussions on reforming the monetary system, Pan Gongsheng pointed out that the international dominant currency has the attributes of a global public good and is borne by a country’s sovereign currency, which inherently has some inherent instability problems. As the SDR has become the dominant international currency, it is confronted with the problems of insufficient international consensus and driving force at the political level. Moreover, the current market scale, depth and liquidity are insufficient, and the role it plays is relatively limited.
In the future, the international monetary system may continue to evolve towards a pattern where a few sovereign currencies coexist, compete with each other and check and balance each other. At the SDR operation level, it is necessary to optimize the mechanism arrangement, gradually expand the use of SDR, increase the regular issuance of SDR and expand the issuance scale, actively promote the active participation of the private sector and various market entities, and widely use SDR in international trade and investment and financing activities.
The evolution of the international monetary system towards the coexistence of a few sovereign currencies and the rapid development of digital technology will promote the diversified development of the cross-border payment system. The diversified cross-border payment system, in turn, will also accelerate the transformation of the international monetary system.
He mentioned that the current global financial stability system is facing some new challenges. First, the regulatory framework remains fragmented and even shows a tendency of “competitive bottom-chasing”. The implementation of international regulatory rules such as Basel III is affected by domestic political factors of member countries and swings, which may lead to regulatory arbitrage and weaken the global financial stability system. The second issue is the insufficient regulation in some emerging fields, including the crypto asset market, climate risk, and artificial intelligence. Third, the supervision of non-bank intermediary institutions remains weak. Over the past 20 years, the proportion of non-bank intermediaries in global financing has risen significantly. This type of financing has relatively weak stability, low transparency, continuously rising leverage levels, and supervision needs to be strengthened.
He believes that among many international financial organizations, the IMF holds a core position and plays a significant role in global economic and financial governance. Taking the powerful International Monetary Fund as the core, building a diverse and efficient global financial safety net, and maintaining the consistency and authority of global financial regulatory rules are the key paths for crisis prevention and resolution, and also the directions that should continue to be adhered to.
Pan Gongsheng pointed out that the current share of the IMF fails to reflect the relative position of member countries in the global economy. Adjustments to the share should be made as soon as possible in accordance with the consensus reached. While improving the governance structure, major international financial organizations should further strengthen their economic supervision functions, actively guide all countries to firmly support economic globalization and the multilateral trading system, and enhance macroeconomic policy coordination.
Post time: Jun-21-2025