China should hold back on yuan internationalisation, says former central bank chief

China should not push the internationalisation of the yuan too aggressively, said former Governor of the People’s Bank of China Zhou Xiaochuan in a speech during the weekend, adding that the process has come “earlier than expected.”

The yuan’s increased use on the global stage in the years leading up to its addition to the IMF’s reserve currency basket in 2016 could be attributed to several issues, Zhou said in a speech at the China 40 Finance Forum, including a continued loss of trust in the dollar following the global financial crisis.

Since its high in August 2015, the yuan’s share in global payments has dropped to 1.81% as of June this year, according to Bloomberg.

As in a soccer match, where a team may win because of its own strength or its opponent’s weakness, the inclusion of the yuan in the IMF’s reserve currency may be a combination of factors, Zhou said.

“But objective conditions can change, and economic growth is sometimes strong and sometimes down,” Zhou went on. “A country can’t hope to get all the good things all together. Sometimes one can only get one out of the two, like you can only get heads or tails when tossing a coin.”