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(Bloomberg) -- People’s Bank of China Governor Pan Gongsheng laid out in the clearest terms yet his vision for the future of a new global currency order after decades of dollar dominance, predicting a more competitive system will take root in the years to come.

“In the future, the global monetary system could continue to evolve toward a situation where a few sovereign currencies co-exist, compete and check and balance each other,” Pan said Wednesday in a keynote speech at the annual Lujiazui Forum in Shanghai.

Pan said there have been discussions around the world on how to reduce excessive reliance on a single currency, adding that the yuan’s global status has risen in recent years.

Confidence in the US is waning after months of President Donald Trump’s erratic policymaking. Investors have been trimming dollar holdings of late, prompting European Central Bank President Christine Lagarde to talk about a potential “global euro moment.”

Since Trump reclaimed the White House this year, the dollar has lost more than 10% of its value against the euro, pound and Swiss franc and is down against every single major currency in the world.

Pan referenced comments from the ECB as saying the US dollar’s dominance is increasingly uncertain and the euro may play a more important role globally. Lagarde made a rare visit to Beijing last week and held talks with Premier Li Qiang, as China’s No. 2 official called for greater cooperation between his country and the ECB.

Speaking at the same event in Shanghai, Wang Xin, director of the research bureau under the PBOC, warned that while market confidence in the dollar has weakened, its future status will depend on how other currencies develop.

“It would be an improvement if we go from a system that overly relies on the dollar to one where several major currencies compete with each other, which would impose both incentives and constraints on countries that issue those currencies,” he said.

China has also been positioning the yuan as a rival to the US dollar. It’s an extension of efforts by President Xi Jinping to build China into a financial power with a currency that’s stable enough to play a rising role in global trade, especially as tensions with the US erupted during Trump’s second term.

The tariff risks this year have intensified that initiative, with some US exporters asking for settlement in alternative currencies, including the yuan, to contain the impact of the dollar’s swings, according to an official at US Bancorp.

The PBOC has meanwhile pivoted from months-long efforts to support the Chinese currency to guarding against the risk of a rapid appreciation. After touching its weakest level since 2007 in April, the onshore yuan has rebounded to gain more than 1% this quarter.

On Wednesday, Pan opened the speech by announcing several measures that will be implemented in Shanghai to open up China’s financial markets and promote its currency’s global reach.

The effort includes setting up an operations center to advance the digital yuan’s internationalization and exploring yuan futures trading, which would increase the variety of products available for currency traders. The PBOC will also encourage trade companies to issue offshore bonds in the city.

Pan also addressed countries whose currencies are widely used around the world, calling on them to shoulder their responsibilities by pushing for economic structural reforms and strengthening domestic fiscal discipline and financial regulation.

The global monetary system’s evolution toward a more multi-polar pattern can make it more resilient, according to Pan. It’s also beneficial to global financial stability, and can push countries to improve their policy discipline, he said.

IMF, SDRs

One of the options is to promote a super-sovereign currency, and International Monetary Fund reserve assets known as special drawing rights, or SDRs, have been considered a choice, according to Pan.

Previously, former PBOC Governor Zhou Xiaochuan long advocated a more prominent role globally for SDR assets before retiring in 2018. Zhou once argued that a “super-sovereign” currency — which the SDRs could potentially represent — may overcome inherent flaws with the present setup and make the global financial system more stable.

But there’s a lack of consensus on promoting SDRs as an international currency, and there needs to be more regular and larger issuance of them to achieve it since the asset is now primarily used in times of crisis, Pan said on Wednesday.

The PBOC governor also reiterated a call for reforming the IMF’s quotas, which determine contributions and voting rights at the institution, to better reflect the rising share of emerging economies in world output. In April, the IMF’s top advisory body pushed back its deadline for the executive board to develop guidance for the next round of quota reforms, to April 2026 from June 2025.

The global cross-border payment system is meanwhile becoming more diverse, as an increasing number of countries promote settlement with their own currencies, according to Pan.

“The situation where a single sovereign currency dominates cross-border payment is changing gradually,” Pan said.

Pan refrained from announcing any major monetary policy moves, however, disappointing investors and traders who’d hoped for greater stimulus. That’s in contrast with last year, when the governor used the same occasion to introduce a major reform of the PBOC’s policy toolbox that unfolded in the following months.

The central bank cut interest rates and the reserve requirement ratio for banks in May, aiming to counter downside risks with a supply of cheaper funds. The cost of borrowing overnight cash among banks fell to its lowest level this year earlier this month.

The easing followed a period when the central bank pushed back against a rally in bonds, which had fueled speculation that China was at risk of deflation.

Benchmark bond yields have since stabilized, aided by the halt of PBOC bond purchases and reduced trade tensions among other measures.

--With assistance from Alan Wong.

(Updates with PBOC official’s comment starting in seventh paragraph.)