Recent disruptions to shipping through the Strait of Hormuz have underscored vulnerabilities in the existing dollar-dominated oil trading system, prompting experts to anticipate a gradual shift toward increased use of alternative currencies for trade settlement. Shi Kang, chair professor at the PBC School of Finance at Tsinghua University, highlighted these vulnerabilities and argued that more oil transactions could move away from the traditional dollar-based framework in the near future.

Zhu Ying, also affiliated with the PBC School of Finance, emphasized the need to strengthen the renminbi’s role as a financing instrument in global supply chains, which could enhance its international stature. Although China contributes nearly one-third of global manufacturing output—equal to the combined share of the United States, Japan, Germany, and South Korea—the renminbi currently holds a relatively modest position in international finance. Zhu described this disparity as a “clear mismatch,” noting that despite the weakening of the U.S. real economy, the dollar-based financial system remains deeply entrenched. He argued that shifting geoeconomic realities will inevitably prompt changes in the global financial architecture.

Zhu stressed that a stronger renminbi is both an inevitable outcome of China’s economic development and a requirement for global financial stability. For the currency to become truly internationally strong, he noted, it must function not only as a medium for cross-border transactions but also as a store of value. This would require deeper bond and derivatives markets, along with a more liquid offshore renminbi market.

Addressing these needs, Guo Miao of China International Capital Corp suggested expanding the supply of offshore renminbi-denominated assets, including government bonds and high-grade corporate bonds, to provide global investors with secure renminbi holdings while supporting China’s domestic economy. In line with this, the Chinese Ministry of Finance plans to issue a total of 84 billion yuan ($12.4 billion) in sovereign bonds denominated in renminbi through Hong Kong markets this year, with the first two issuances of 29.5 billion yuan occurring in February and April.

Shi Kang indicated that the global financial system requires more diversified safe-haven assets and sources of liquidity, a gap the renminbi is increasingly positioned to fill due to China’s ongoing institutional reforms and opening-up policies. He clarified that China’s intention is not to replace the dollar system or establish a separate currency regime but rather to remedy shortcomings within the current monetary order by encouraging broader currency participation, thereby enhancing financial stability worldwide.

Marc Uzan, executive director of the Reinventing Bretton Woods Committee, agreed that central banks are diversifying their reserves and that more energy contracts are being priced in nondollar currencies, with increasing use of local currencies for trade settlement. However, he noted the dollar’s structural advantages remain substantial and said a swift end to its predominant role is unlikely. Uzan anticipates a multipolar currency future in which the dollar, renminbi, and various regional currencies all assume greater prominence.