China to establish international center for digital yuan in Shanghai

On June 18, 2025, during the LuJiazui Forum in Shanghai, China announced several measures to enhance the opening-up of its financial sector and capital markets. Li Yunze, head of the National Financial Regulatory Administration, highlighted a commitment to aligning regulations with high international standards, expanding the role of foreign institutions in China’s financial projects, and framing new practices for openness. These measures include refining the Qualified Foreign Institutional Investor (QFII) program to ease access for overseas investors, as well as increasing the number of futures and options products available to them. The introduction of an international operation centre for the digital yuan, or e-CNY, was particularly emphasized by Pan Gongsheng, Governor of the People’s Bank of China. This initiative aims to bolster the international use of the digital currency while also serving as a stepping stone for innovative practices in digital finance. Under this framework, fresh application scenarios for the e-CNY will be developed and cross-border payment services are expected to improve significantly. These steps are seen as essential for promoting the renminbi's usage in the global payment system. Furthermore, developments will also include the creation of offshore bonds within Shanghai’s free trade zone, which is intended to broaden the financing avenues available to Chinese companies looking to expand internationally and enhance participation in the Belt and Road Initiative. Analysts argue that these steps will bolster Shanghai’s position as a key hub in the offshore renminbi market, allowing for increased participation from global financial entities, demonstrating China’s intent to pursue deeper and broader financial integration with the world. At the forum, experts underscored that China’s financial opening-up efforts reflect a significant shift away from previous, more passive strategies towards a proactive approach. The measures also coincide with broader trends in the international financial system, which is increasingly fragmented, as foreign banks and insurers significantly expand their market share in China. This shifting landscape creates fresh opportunities for collaboration, with industry leaders in the UK expressing optimism about the benefits of China's gradual financial liberalization. In conclusion, China’s recent announcements illustrate its serious commitment to reforming its financial sector, enhancing foreign participation, and establishing frameworks that align with global standards. This could signal a transformative period for both China’s economy and its interaction with global markets.